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European and US stock markets rose Thursday as the European Central Bank cut interest rates and results from key chip maker TSMC calmed fears that the tech sector was struggling.
All the major eurozone exchanges closed higher, pulling London up with them, after the ECB cut its main interest rate a quarter point and expressed confidence that inflation is coming under control.
“Overall, the ECB’s decision is positive news for investors,” said Jochen Stanzl, chief analyst at CMC Markets. “Investors now find themselves in a broadly positive environment, with the ECB supporting the bullish mood rather than obstructing it.”
Meanwhile, all the main indexes on Wall Street were higher in midday trading. The tech-heavy Nasdaq led the way after Taiwan Semiconductor Manufacturing Company, which controls more than half the world’s output of chips, announced better-than-expected third quarter profits.
Earlier this week, Dutch semiconductor equipment maker ASML released disappointing forward guidance, leading some investors to fret that the recent tech rally had gone too far and causing a steep sell-off on both sides of the Atlantic.
“Early earnings from semiconductor manufacturing giant TSMC has allayed fears over a potential slowdown in demand for chips signalled by Tuesday’s dour ASML data,” said Joshua Mahoney, chief market analyst at Scope Markets.
At midday Thursday, chip-giant Nvidia was up almost three percent and its rival AMD was up more than one percent.
Wall Street was also boosted by data showing that US retail sales accelerated in September as well as by a drop in jobless claims, the latest signs of health in the US economy.
The ECB’s decision to cut its benchmark rate by 25 basis-points had been well signalled and was widely expected. But the central bank’s press release highlighted that inflation is coming under control and that eurozone economic activity is slackening, indicating further cuts to come.
“We think the data will support 25 basis point rate cuts at each of the next few meetings, at the very least,” said Jack Allen-Reynolds, deputy eurozone economist at Capital Economics.
Earlier Thursday, eurozone inflation for September was revised down to 1.7 percent from 1.8 percent, placing it well below the ECB’s two-percent target. A weak economy has also added pressure on the ECB to reduce borrowing costs.
The euro slid against the dollar and gold hit a new record high, holding above $2,700 an ounce.
Shares in Finnish telecoms equipment maker Nokia dropped almost three percent after it reported an eight-percent drop in sales.
Nestle’s stock price rose almost 3 percent after its new CEO, Laurent Freixe, announced an overhaul of the executive team as sales slump at the Swiss food giant.
– China’s property sector crisis –
Earlier in the day, Hong Kong and Shanghai stock markets closed down, with property stocks tumbling after traders were left disappointed by fresh measures from China’s housing minister to ease a real estate crisis.
China, the world’s number-two economy, has struggled to recover since lifting strict Covid controls at the end of 2022, battered by a debt crisis in the property sector and torpid consumer demand.
Oil prices inched higher after slumping in recent days.
– Key figures around 1540 GMT –
New York – Dow: UP 0.3 percent at 43,219.16 points
New York – S&P 500: UP 0.3 percent at 5,857.06
New York – Nasdaq Composite: UP 0.4 percent at 18,443.52
Paris – CAC 40: UP 1.2 percent at 7,583.73 (close)
Frankfurt – DAX: UP 0.8 percent at 19,583.39 (close)
London – FTSE 100: UP 0.7 at 8,385.13 points (close)
Tokyo – Nikkei 225: DOWN 0.7 percent at 38,911.19 (close)
Hong Kong – Hang Seng Index: DOWN 1.0 percent at 20,079.10 (close)
Shanghai – Composite: DOWN 1.1 percent at 3,169.38 (close)
Euro/dollar: DOWN at $1.0826 from $1.0859 on Wednesday
Pound/dollar: UP at $1.2995 from $1.2986
Dollar/yen: UP at 150.12 yen from 149.63 yen
Euro/pound: DOWN at 83.34 pence from 83.62 pence
West Texas Intermediate: UP 0.6 percent at $70.81 per barrel
Brent North Sea Crude: UP 0.4 percent at $74.54 per barrel
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