World stock markets wavered Wednesday as investors dwelled on US recession concerns and a bumper interest-rate hike in New Zealand.
On Wall Street, the Dow edged higher in late morning trading, but the S&P 500 and Nasdaq both fell as more data added to recession concerns.
London rose but Frankfurt and Paris fell in muted trade during a holiday-shortened week, while Asian indices drifted lower.
Oil dipped, having spiked earlier this week following shock output cuts from OPEC+ crude producers.
“Markets are drifting as investor thoughts start to turn towards the scale of severity, as the likelihood of a recession later in the year in the US increases,” said Richard Hunter, head of markets at trading firm Interactive Investor.
– New Zealand lift rates –
The central bank of New Zealand on Wednesday became the latest to hike interest rates sharply to tackle soaring inflation, a day after its peer in Australia paused its own monetary tightening campaign.
The Reserve Bank of New Zealand lifted its rate by a larger-than-expected 50 basis points to 5.25 percent.
“Central banks seem currently divided on whether inflation has peaked and therefore whether to tap on the tightening brakes,” Hunter told AFP.
“The New Zealand decision is in contrast to the Australian decision to hold, and the market consensus is at the moment evenly split between whether the US Federal Reserve’s next move is a final 0.25 percentage point rise — or no action at all.”
After March’s banking sector-sparked turmoil, markets have enjoyed a few bright weeks on optimism the Fed will temper its interest rate hikes earlier than thought.
The rally continued at the start of this week, even after surprise cuts in oil output by major producers sent prices soaring and reignited worries over inflation, which has been coming down in the past months.
But New York traders turned sellers Tuesday after data showed February job openings at US companies fell to their lowest level since May 2021 and below forecasts.
While figures showing a weaker labour market can give the Fed room to stop hiking rates, analysts said the reading was also seen as a warning that the economy was on the slide.
Data released by payrolls firm ADP on Wednesday showed US private sector employment increased by 145,000 jobs last month, but that was way below expectations.
Meanwhile, the US trade deficit rose to $70.5 billion in February, separate data showed, as both imports and exports fell, which indicates slower global trade activity.
“The slowing economic activity is something the Fed will likely be pleased to see, yet it appears to be giving the stock market some cause for pause after its strong run off the mid-March lows,” said market analyst Patrick O’Hare at Briefing.com.
– Gold sparkles –
The price of gold, considered a safe bet in times of economic turmoil, rose Wednesday toward a record peak, one day after breaking $2,000 per ounce.
Gold climbed as high as $2,032.07, a level last seen in early 2022 and not far from a record $2,075.47 set in August 2020.
“Investors fled to the yellow metal as a safe-haven play, given uncertainty about US growth expectations,” said TickMill Group analyst Patrick Munnelly.
Oil prices also retreated, with Brent dipping to $84.78 per barrel, after jumping higher Monday following a weekend production cut by OPEC+ nations.
“If OPEC+ had hoped that its weekend move would help drive prices back towards $90 in short order, the economic data appears to be having other ideas,” said Michael Hewson at CMC Markets UK.
– Key figures around 1530 GMT –
New York – Dow: UP less than 0.1 percent at 33,429.47 points
London – FTSE 100: UP 0.4 percent at 7,662.94 (close)
Paris – CAC 40: DOWN 0.4 percent at 7,316.30 (close)
Frankfurt – DAX: DOWN 0.5 percent at 15,520.17 (close)
EURO STOXX 50: DOWN 0.4 percent at 4,298.36 (close)
Tokyo – Nikkei 225: DOWN 1.7 percent at 27,813.26 (close)
Hong Kong – Hang Seng Index: Closed for holiday
Shanghai – Composite: Closed for holiday
Euro/dollar: DOWN at $1.0921 from $1.0953 on Tuesday
Pound/dollar: DOWN at $1.2470 from $1.2501
Euro/pound: DOWN at 87.60 pence at 87.62 pence
Dollar/yen: DOWN at 130.95 yen from 131.71 yen
Brent North Sea crude: DOWN 0.2 percent at $84.78 per barrel
West Texas Intermediate: DOWN 0.5 percent at $80.32 per barrel
