European stocks gain as recovery hopes trump inflation fear
London, March 16 (AFP/APP):Optimism over an economic recovery helped push European stock markets higher Tuesday, while early trading was subdued in New York with the focus on the Federal Reserve’s much-anticipated policy meeting this week.
Weaker US data dampened the mood on Wall Street, but news that several European countries had suspended use of the AstraZeneca vaccine owing to safety concerns appeared to have little impact on continental sentiment.
Elsewhere, the dollar was mixed against its main rivals and oil prices slid on profit-taking after recent strong gains.
On the corporate front, shares in Nokia were off by around 0.4 percent after the Finnish telecoms equipment maker said it will slash up to 11 percent of its workforce within two years.
The firm is looking to cut costs and focus on a few key areas in the face of tough competition over super-fast 5G networks.
The London, Paris and Frankfurt stock markets were up before closing, while the Dow was down and Nasdaq rose in morning trade. The main Asian markets closed higher.
– Fed on inflation –
The Fed’s two-day policy meeting beginning Tuesday is front and centre of investors’ minds as they look for its response to the rally in US bond yields that has rattled trading floors.
However, the general consensus is that policymakers will maintain their vast bond-buying scheme and keep rates at record lows until 2023.
Fed boss Jerome Powell “will rely on the short-term risks to the outlook to defend his ultra-easy monetary stance”, said OANDA’s Edward Moya.
“Powell will likely replay his best hits when discussing inflation, noting that price increases later in the year won’t be large or persistent.
“The summertime is when inflation could rear its ugly head, so Powell should be able to push back any concerns until then,” Moya added.
Expectations for a surge in activity in the second half of the year, backed by huge government rescue packages and central bank largesse, have helped power world markets to record or multi-year highs.
However, the recovery has investors growing increasingly worried about soaring inflation that could force national banks to wind down the ultra-loose monetary policies that have helped send equities higher.
US benchmark 10-year Treasury yields — a guide to future interest rates — have risen to a one-year high in recent weeks.
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