Asian and European markets were mostly higher on Wednesday, following a tech-led surge on Wall Street as investors braced for the release of a key U.S. inflation reading.
In foreign exchange markets, the yen fell to levels that prompted warnings of intervention from Japanese authorities.
The euro remains under pressure ahead of this weekend’s French election, with opinion polls predicting a landslide victory for far-right and left-wing parties and catapulting President Emmanuel Macron’s centrist party into third place.
The Paris stock market was down 0.5% in midday trading. The euro zone’s main exchange in Frankfurt was up 0.2% despite a major survey showing German consumers are becoming more pessimistic heading into July, spooked by stubborn inflation and economic uncertainty.
A future forecast survey released by polling firm GfK and the Nuremberg Institute for Market Decisions (NIM) showed a drop of 0.8 points from the previous month to minus 21.8 points.
Outside the euro zone, the London stock market rose 0.1% as it approached the mid-point.
“Fears that big market moves are imminent are now receding,” said Susanna Streeter, head of money markets at Hargreaves Lansdown.
“However, persistent inflation concerns remain, with Sydney’s ASX 200 index falling as Australian inflation came in higher than expected.”
Investors were awaiting Friday’s release of U.S. personal consumption expenditures, the Federal Reserve’s preferred inflation gauge, in hopes that a weaker reading would prompt the Fed to cut interest rates soon.
The Fed’s so-called “dot plot” interest rate guidelines suggest one rate cut by January, down from three expected in March, but there is debate over whether that would mean two cuts or none at all.
Stocks have been buoyed this year by hopes that authorities will ease interest rates after a long period of trying to keep inflation in check.
But the stock rally is showing signs of fading as a wave of data shows the U.S. economy and labor market remain strong, leaving investors worried that valuations, especially among technology companies, may be overextended.
On Tuesday, both the Nasdaq and the S&P 500 recovered from recent sell-offs thanks to AI chip giant Nvidia recovering from a three-day heavy sell-off.
Asian markets were mostly higher on Wednesday after struggling in early trade.
Uncertainty over U.S. interest rates has kept the dollar strong, drawing attention to the yen approaching levels that forced Japan to enter the foreign exchange market earlier this year.
The Asian country’s top monetary official said authorities were ready to act around the clock if the currency were to plummet.
Billions of dollars were pumped into the yen to shore it up after it hit a 34-year low of 160.17 in late April.
Traders are also keeping a close eye on comments from the Bank of Japan, which many say is too cautious in moving away from its ultra-loose monetary policy.
It is expected to raise interest rates next month and begin tapering bond purchases, which have helped to curb borrowing costs.
– Key figures around 1100 GMT –
London – FTSE 100: up 0.1% to 8,255.32 points
Paris – CAC 40: down 0.5% to 7,623.01
Frankfurt – DAX: up 0.2% to 18,207.13
Euro Stoxx 50: down 0.1% to 4,929.78
Tokyo – Nikkei Stock Average: Up 1.3% to 39,667.07 (closing price)
Hong Kong – Hang Seng Index: up 0.1% to 18,089.93 (close)
Shanghai Composite Index: Up 0.8% to 2,972.53 (closing price).
New York – Dow Jones Industrial Average: down 0.8% to 39,112.16 (closing price)
Dollar/yen: Up to 160.14 yen from 159.68 yen on Tuesday
EUR/USD: down from 1.0715 to 1.0686
EUR/GBP: down from 84.43p to 84.40p
Pound/dollar: down from $1.2686 to $1.2663
Brent crude: up 0.8% to $85.70 per barrel
West Texas Intermediate: Up 0.9% to $81.59 a barrel.
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