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Global stocks mixed on tepid US inflation, trade talk hopes

Global stocks mixed on tepid US inflation, trade talk hopes

Global stocks were mixed on Thursday, with Wall Street equities gaining after a tepid inflation report and the latest conciliatory move between the US and China on trade.

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14.09.2018 08:21 AM

Global stocks were mixed on Thursday, with Wall Street equities gaining after a tepid inflation report and the latest conciliatory move between the US and China on trade.

Analysts also said sentiment was boosted by a Turkish decision to hike interest rates, which boosted the Turkish currency.

"In the end, it wasn't the fairly uninteresting updates from the Bank of England or the ECB, nor a much-needed, and huge, rise in interest rates from the Central Bank of Turkey, that got the markets moving this Thursday but rather a disappointing inflation reading from the US," said Spreadex analyst Connor Campbell.

US consumer price inflation slid to 2.7 percent on an annual basis in August, from 2.9 percent in July, removing one source of pressure that could push the Federal Reserve to raise interest rates faster than the gradual pace it has indicated.

Among major US indices, the tech-rich Nasdaq led the way with a 0.8 percent gain that included a handsome 2.4 percent gain for Apple a day after it unveiled new iPhone models.

Earlier, markets in Asia started off a rally after the United States reached out to China for fresh talks in a bid to avert a trade war, providing some much-needed respite to weary investors.

News that Treasury Secretary Steven Mnuchin had invited top Chinese officials for talks came just under a week after Donald Trump threatened to impose tariffs on all $500 billion worth of imports from China.

China's commerce ministry on Thursday welcomed the offer and said the two sides were discussing details.

Hong Kong's Hang Seng Index jumped 2.5 percent, having fallen for six straight days and into a bear market, which is a 20 percent drop from its January record high.

Most other markets in the region followed it higher.

In Europe, London ended the day down 0.4 percent, penalized by a stronger pound which hurts companies which do most of their business globally and convert profits back into sterling.

The European Central Bank indicated it planned to continue reducing its asset purchases, which helped the euro rise against the dollar. 

Frankfurt's DAX 30 managed to remain in the green but the CAC 40 in Paris slid into the red just before the closing bell.

Turkish delight

The biggest surprise on Thursday came from Turkey's central bank, which announced a massive rate hike to battle soaring inflation and boost the lira, prompting the embattled currency to surge in value.

The central bank hiked the one week repo auction rate 625 basis points from 17.75 percent to 24 percent, significantly higher than the Bloomberg consensus of 21 percent.

The lira reacted strongly to the decision, rising by five percent in value to 6.0 lira to the US dollar. It later shed some of those gains but was still up over 4.1 percent in value at 6.08 to the dollar.

Crude oil prices tumbled as Hurricane Florence weakened on its approach towards the US east coast, reducing the risk of damage and disruption to oil installations.

Traders also focused on the International Energy Agency announcement that global oil output hit a record of 100 million barrels per day in August, providing some relief from concerns about supplies as exports from Iran and Venezuela decline.

Key figures around 2100 GMT

New York - Dow Jones: UP 0.6 percent at 26,145.99 (close)

New York - S&P 500: UP 0.5 percent at 2,904.18 (close)

New York - Nasdaq: UP 0.8 percent at 8,013.71 (close)

London - FTSE 100: DOWN 0.4 percent at 7,281.57 (close)

Frankfurt - DAX 30: UP 0.2 percent at 12,055.55 (close)

Paris - CAC 40: DOWN 0.1 percent at 5,328.12 (close)

EURO STOXX 50: UP 0.2 percent at 3,333.68 (close)

Tokyo - Nikkei 225: UP 1.0 percent at 22,821.32 (close)

Hong Kong - Hang Seng: UP 2.5 percent at 27,014.49 (close)

Shanghai - Composite: UP 1.2 percent at 2,686.58 (close)

Euro/dollar: UP at $1.1689 from $1.1626 at 2100 GMT

Pound/dollar: UP at $1.3105 from $1.3045

Dollar/yen: UP at 111.94 yen from 111.26 yen

Oil - Brent Crude: DOWN $1.56 at $78.18 per barrel

Oil - West Texas Intermediate: DOWN $1.78 at $68.59 per barrel
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