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The Bank of England kept rates steady at 4.5% on Thursday, as inflation remains sticky and global uncertainty ratchets up.
ADVERTISEMENTEuropean markets opened downbeat on Friday morning as they digested interest rate decisions from the US Federal Reserve, the Bank of England, Sweden’s Riksbank and the Swiss National Bank. Britain’s FTSE 100 opened 0.2% lower on Friday morning, mainly weighed down by JD Sports Fashion, IAG and Croda International. Germany’s DAX also opened 0.1% lower on Friday morning, with Deutsche Post and BASF being some of the top losers. Similarly, France’s CAC 40 index opened 0.4% lower on Friday morning as well, with the STOXX 600 also dipping 0.5%. “The Fed’s mixed rhetoric has been difficult to interpret for markets – initially it was seen as positive for risk, but that seemed to come down to earth yesterday. Lower growth and higher inflation is rarely a good sign for the US economy, and the Fed was open to reacting if things started to get worse,” said Kyle Chapman, FX markets analyst at Ballinger Group. UK investors also looked forward to next week’s Spring Statement, where the chancellor will give a financial update to the House of Commons. Pantheon Macroeconomics said in a note: “We think that higher gilt yields, weaker growth, and above-profile borrowing this year mean that Government borrowing will be raised by £10b by 2029/30. We expect the Government will need to go further than its recent commitment to increase defence spending to 2.5% of GDP.” “We think it will announce an increase to at least 3.0% of GDP by 2027. Accordingly, the accounting change of redirecting the aid budget towards defence spending will buy little time. Taxes and borrowing will both need to rise in October to fund this generational challenge.”Asia-Pacific markets overnightJapan’s benchmark Nikkei 225 index closed 0.2% lower at 37,677.1. Stronger than expected consumer inflation data led to increased hopes that the Bank of Japan will announce more interest rate hikes. China’s Shanghai Composite Index closed 1.3% lower on Friday, at 3,364.8, as an increase in bearish sentiment and a weak economic growth outlook dampened stocks. A slow job market recovery and lagging credit demand also impacted investor sentiment. Hong Kong’s Hang Seng index closed 2.2% lower on Friday to 23,689.7. Australia’s S&P/ASX 200 index closed 0.2% higher at 7,931.2 on Friday, whereas South Korea’s Kospi index inched up 0.2% to 2,643.1. US markets, closing prices on ThursdayUS stocks were lacklustre on Thursday, as optimism over interest rate decreases pulled back.That followed the recent decision from the US Federal Reserve to slash its economic growth forecast and up its inflation outlook. The S&P 500 index closed 0.2% lower on Thursday, primarily dragged down by companies like Accenture, Gartner and Microchip Technology. The NASDAQ 100 index also dipped 0.3% on Thursday, with Microchip Technology, Broadcom and Warner Bros Discovery being some of the biggest losers. ADVERTISEMENTThe Dow Jones Industrial Average index closed mainly flat on Thursday, with IBM, Nike and Walt Disney being the top losers, while companies like Boeing and Chevron saw slight gains. Commodities and currenciesIn commodities, US crude oil inched up 0.2% to $68.2 per barrel on Friday morning, whereas Brent crude oil rose 0.1% to $72.1 per barrel. Gold dropped 0.5% to $3,029.7 per ounce on Friday morning, staying near record highs as demand increased amid ongoing economic uncertainty. The EUR/USD pair dropped 0.2%, whereas the EUR/GBP pair gained 0.1% on Friday morning. ADVERTISEMENTCorporate earningsNike reported third quarter financial year 2025 revenues of $11.3 billion (€10.4bn), which was a year-on-year decrease of 9% on a reported basis. This drop was primarily because of a decrease in demand for the company’s core footwear and apparel divisions, with sales lagging particularly in China. Equipment sales increased.Nike Direct revenues also plunged 12% to $4.7bn (€4.3bn), with its gross margin falling 330 basis points to 41.5%. The company’s chief financial officer (CFO), Matthew Friend, highlighted during an investor call that geopolitical dynamics, tax regulations and new tariffs were some of the factors causing uncertainty. The company’s share price dropped more than 5% in pre-market trading on the New York Stock Exchange (NYSE) on Friday morning. JD Wetherspoon Plc announced that revenue had risen 3.9% to £1.1bn (€1.3bn) in the 26 weeks ended 26 January 2025. Profit before tax dropped 8.6% to £32.9m (€39.3m), with operating profit also falling 4.3% to £64.8m (€77.4m). ADVERTISEMENTThe company’s share price plunged 9.5% on the London Stock Exchange on Friday morning.
