Global investors traded cautiously yesterday ahead of a monetary policy announcement in the US, while London got a boost as Britain unveiled its annual budget.
In London, the FTSE 100 up 0.6% to 6,175.49 points; Frankfurt - DAX 30 up 0.5% at 9,983.41 points and Paris - CAC 40 down 0.2% at 4,463 points at the close yesterday.
“European stocks were mixed yesterday with the usual steady, low-activity trading ahead of a Federal Reserve meeting,” CMC Markets analyst Jasper Lawler.
Investors hope that the Federal Reserve’s latest meeting will provide some guidance on its plans for interest rates this year.
However Connor Campbell at SpreadEx, said that “a jam-packed afternoon for region-specific data has left the global indices in a variety of different states...”
London main FTSE-100 index closed 0.6% higher, with investors happy with the government’s budget plans outlined by finance minister George Osborne.
Chancellor of the Exchequer Osborne said the government would seek additional spending cuts totalling £3.5bn ($5.0bn, €4.5bn), but also cut the forecast for economic growth this year to 2.0% due to turbulence in global financial markets and slower growth in China.
“From the FTSE’s perspective George Osborne’s 8th annual budget was, when everything is weighed up, a positive one...” said Campbell.
Oil stocks gained thanks to the elimination of a tax on the industry.
Also helping was Brent crude moving back above $40 per barrel on a group of key Opec and non-Opec producers announcing will hold a meeting next month about a possible output freeze aimed at addressing a global supply glut.
The news Deutsche Boerse and the London Stock Exchange have agreed terms on their planned blockbuster merger to create one of the world’s biggest exchanges also boosted sentiment.
But Deutsche Boerse’s share price only got a 0.16% boost to €75.87 and LSE shares shed 1.2% to 2,870 pence as investors remained concerned the third attempt by the two to merge could be derailed by a rival bid by US exchange operator ICE or regulators.
US stocks were also little changed ahead of the end of the Fed meeting and a statement from its head, Janet Yellen, with the Dow Jones Industrial Average essentially flat in midday trading.
While no new measures are expected from the meeting, Yellen’s comments will be pored over for clues to policymakers’ thinking after December’s first interest rate rise in almost a decade.
Data released yesterday morning showed core inflation up 2.3% year-over-year, above the Fed’s 2.0% inflation target, while housing starts were also solidly higher, signalling US economic growth is on track.
The data could result in the central bank sounding “less dovish than the market would like to hear,” said Briefing.com analyst Patrick O’Hare.
Back in Asia yesterday, Hong Kong stocks closed 0.2% lower.
Shanghai ended up 0.2% for its fourth straight gain, after Chinese Premier Li Keqiang said at the close of the National People’s Congress the economy would not suffer a hard landing.
Sydney gained 0.2% and Seoul was 0.3% higher.
Tokyo finished 0.8% lower, despite a weaker yen that came after the Bank of Japan defended its negative interest rate policy and hinted at further cuts aimed at kickstarting lending.
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