While most markets are up so far this year, investors continue to fret over the outlook for the global economy (Daniel ROLAND)

London (AFP) – Updates from the US Federal Reserve and the Bank of England left markets mixed on Thursday as investors weighed their messages on the outlook for growth and monetary policy.

Frankfurt was the only of the three main European markets to be in positive territory in afternoon trading. 

Asian stock markets mostly closed higher, while Wall Street opened marginally lower after having retreated on Wednesday after the Federal Reserve dented prospects for a possible cut in US interest rates.

Traders were jolted by Fed boss Jerome Powell’s assessment Wednesday of recent weak US inflation as being only “transitory”.

The comments came after the Fed’s latest policy meeting and sank faint hopes that the US central bank would announce a rate cut later in the year. 

It went also against a call from US President Donald Trump to ease borrowing costs to help bolster the economy.

Briefing.com analyst Patrick O’Hare said “the stock market seems to be licking its wounds after being told yesterday by Fed Chair Powell that the FOMC (monetary policy committee) doesn’t see the need for a rate cut, because it suspects the factors pushing inflation rates lower are transitory”.

Meanwhile, the Bank of England on Thursday raised its forecast for UK economic growth this year to 1.5 percent from 1.2, as stockpiling offsets lower business investment elsewhere ahead of Brexit.

Analysts were split whether the BoE sent signals it could raise its main interest rate from 0.75 percent before the current market expectations of a hike by the end of 2021.

The pound slipped against the dollar and the blue-chip FTSE 100 stock index dipped.

Elsewhere, there was optimism over the China-US trade talks, with Treasury Secretary Steven Mnuchin describing a high-level two-day meeting in Beijing as “productive”.

Chinese negotiators head to Washington next week for another round, with CNBC citing unnamed sources as saying a deal could be signed at the end of next week.

Oil prices meanwhile extended losses Thursday after data showed US crude inventories and production had jumped.

“Oil was already sliding on the run up to the Energy Information Administration report, and when the update showed that US oil and gas inventories jumped by 9.93 million barrels and 910,000 barrels respectively, the energy market continued to drop,” noted David Madden, analyst at CMC Markets UK.

 – Key figures around 1330 GMT – 

London – FTSE 100: DOWN 0.3 percent at 7,364 points 

Frankfurt – DAX 30: UP 0.1 percent at 12,360.66

Paris – CAC 40: DOWN 0.6 percent at 5,553.25

EURO STOXX 50: DOWN 0.5 percent at 3,497.44

New York – Dow: DOWN 0.1 percent at 26,398.61

Hong Kong – Hang Seng: UP 0.8 percent at 29,944.18 (close) 

Shanghai – Composite: Closed for holiday

Tokyo – Nikkei 225: Closed for holiday

Euro/dollar: UP at $1.1197 from $1.1192 at 2050 GMT

Pound/dollar: DOWN at $1.3043 from $1.3045 

Euro/pound: UP at 85.84 pence from 85.79 pence

Dollar/yen: UP at 111.53 from 111.16

Oil – Brent Crude: DOWN $1.52 at $70.66 per barrel

Oil – West Texas Intermediate: DOWN $1.66 at $61.94

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Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.