Yahoo Finance Wall Street bounces back amid debt deal as FTSE closes higher
A look at how the major markets are performing on Thursday
The FTSE 100 and European stocks finished higher this Thursday as inflation across the euro area dropped to 6.1% and tempered optimism sparked by passage of a bill by US lawmakers to suspend the nation's debt ceiling and bets that the Federal Reserve will skip raising interest rates in its next meeting.
The FTSE 100 (^FTSE) rose 0.63% to close at 7,492 points, while the CAC 40 (^FCHI) in Paris gained 0.52% to 7,135 points. In Germany, the DAX (^GDAXI) climbed 1.10% to 15,835.
Inflation in the 20 nations sharing the euro eased to 6.1% in May from 7.0% in April. That takes annual inflation closer to the European Central Bank’s target of 2% – although prices are still rising three times as fast as the ECB is aiming for.
Core inflation, which excludes volatile food and fuel prices and which has played an increasing role in the ECB's policy deliberations, fell to 5.3% from 5.6%
The ECB has raised base rates by a combined 375 basis points to 3.25% over the past year to tackle runaway prices.
Euro area #inflation at 6.1% in May 2023, down from 7.0% in April. Components: food, alcohol & tobacco +12.5%, other goods +5.8%, services +5.0%, energy -1.7% - flash estimate https://t.co/DvudOtOCLT pic.twitter.com/MabN9cDgL1
— EU_Eurostat (@EU_Eurostat) June 1, 2023
Food, alcohol and tobacco prices rose by 12.5% over the last year, down from 13.5% in April.
Industrial goods inflation slowed to 5.8% from 6.2% in April, while services inflation nudged down to 5.0% from 5.2%.
Energy prices fell by 1.7% compared with April 2022 – as the inflation data catches up with the surge in costs after Russia’s invasion of Ukraine.
FTSE
London shares were higher after the FTSE 100 index lost 5% of its value during an eventful May for global markets.
Dr Martens (DOCS.L) tumbled 12% after it warned that margins would fall in the year ahead alongside a hefty fall in annual profits.
The mid-cap FTSE 250 (^FTMC) company said pre-tax profits slumped by 26% in the year to 31 March 2023, from £214.3m ($266.15) to £159.4m. That’s despite a 10% rise in revenues, to just over £1bn for the first time.
The company says it had a strong performance in Europe, the Middle East and Africa, but a “softer performance in America”.
Read more: Revealed: The cheapest UK city for a first-time buyer
Profits held steady at online car marketplace Auto Trader (AUTO.L) and sales climbed 16% to top £500m in the year to end March. Despite the strong results, shares slipped 4.16%.
Auto Trader said its used car Retail Price Index saw a 12% like-for-like year-on-year increase in prices over the past 12 months, which has contributed to favourable trading conditions for our customers. Pre-tax profits dipped 2% to £293m.
AstraZeneca (AZN.L) lost 0.24% even as the drug maker said a combination of its cancer drug Lynparza and abiraterone has been approved in the US for the treatment of a type of prostate cancer.
Ocado (OCDO.L) has kept its place in the FTSE 100 index after the results of the June quarterly reshuffle were announced by FTSE Russell last night, with property owner British Land (BLND.L) relegated instead.
Asos (ASC.L), the British online fashion pioneer valued at more than £7bn just over two years ago, has been relegated from the FTSE 250 of mid-sized companies.
US and Asia
US stocks rose on Thursday after the House passed a bill to raise the debt ceiling late Wednesday evening.
The Dow Jones (^DJI) rose 0.18% to 32,968 points. The S&P 500 (^GSPC) gained 0.55% to 4,202 points and the tech-heavy NASDAQ (^IXIC) advanced 0.69% to 13,024.
The clock is ticking down, as Congress must race to pass the deal to avoid a catastrophic default by June 5. That so-called X-Date is when the US will run out of money to pay its bills, Treasury Secretary Janet Yellen has warned.
“The deadline to raise the debt ceiling is rapidly approaching, and the likelihood of triggering a negative market reaction with severe economic consequences will only increase as we approach the precipice,” Business Roundtable CEO Joshua Bolten said in a statement after the House vote.
“We call on the Senate to eliminate the threat of a default by passing this bipartisan bill as soon as possible," he added.
Meanwhile, both Federal Reserve Governor Philip Jefferson and Philadelphia Federal Reserve President Patrick Harker signalled Wednesday that the central bank could pause rate hikes at its next policy meeting.
In Asia, markets were mostly higher after the approval of the debt ceiling and budget cuts package, avoiding a default crisis.
But the enthusiasm was muted by worries about the Chinese economy after disappointing recent data on a recovery in the world’s second largest economy, and a key driver of regional growth.
Read more: Fuel prices: Supermarkets cut diesel by 7p as watchdog looms
Tokyo’s Nikkei 225 (^N225) gained 0.84% to 31,148 points, while the Hang Seng (^HSI) in Hong Kong rose 0.31% to 18,290. The Shanghai Composite (000001.SS) climbed 0.11% to 3,208 points.
China’s factory activity slumped to its weakest level for a second straight month, another sign its post-pandemic economic recovery is losing steam.
Pound
The pound’s (GBPUSD=X) gained some ground against the dollar, with sterling trading at $1.2469.
The sterling (GBPEUR=X) was flat against the euro, trading at €1.1639.
Oil markets
Meanwhile, Brent crude (BZ=F) lost ground, trading at around $72/barrel as investors feared the weak economic data coming out of China could hit fuel demand.
OPEC+ has given mixed signals on whether further cuts are likely, keeping oil prices volatile recently. The organisation will meet on June 4 to discuss whether additional oil production cuts should be implemented.
Watch: AI stocks to buy if you want to play the AI 'supercycle': Strategist
Download the Yahoo Finance app, available for Apple and Android.
