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Paris, London stocks hit all-time highs as Wall Street tumbles

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Wholesale producer prices rose more than expected in the United States, raising concerns about further central bank rate hikes./AFP
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Feb 17, 2023 - 03:17 AM

NEW YORK — The London and Paris stock exchanges leapt to all-time highs Thursday, boosted by strong corporate results, but Wall Street fell on renewed concerns about future interest rate hikes.

The Paris CAC 40 index jumped to a record 7,387.29 points near midday, beating a peak hit last year by just a few points. It finished the day 0.9 percent higher at 7,366.16 points.

A day after breaking the 8,000-point mark for the first time, London’s benchmark FTSE 100 hit a new high at 8,047.06 points. It closed 0.2 percent higher at 8,012.53 points.

Frankfurt’s DAX gained 0.2 percent at 15,533.64 points.

But Wall Street struggled, with the Dow Jones Industrial Average and broad-based S&P 500 both shedding more than one percent.

The tech-heavy Nasdaq tumbled 1.8 percent.

Traders are tracking economic data for clues into how it might influence the US Federal Reserve, with concern that the central bank could decide to prolong its policy of raising rates to control inflation.

Official data earlier this week showed annual inflation rates easing in Britain and the United States, although they remain elevated.

But wholesale inflation in the United States picked up more than expected in January, bumped by rising costs of goods on higher gasoline prices, according to government data.

The producer price index (PPI) bounced 0.7 percent in January from December.

Hotter consumer and wholesale inflation raise the question of whether the Fed needs to do more, said Angelo Kourkafas of financial services firm Edward Jones.

The Fed “will have to be more forceful,” Kourkafas said, adding that this was likely dragging markets down.

Briefing.com market analyst Patrick O’Hare added that the data “will stoke worries about inflation pressures persisting at higher levels for longer than expected — and the Fed keeping rates higher for longer.”

Energy company profits 

While rate increases aim to slow inflation, the higher borrowing costs put a brake on economic activity, raising concerns that they could trigger deep recessions.

Strong US retail sales data on Wednesday pushed Wall Street higher, but a report on Thursday showed manufacturing activity in the highly industrialised Philadelphia area contracted for a sixth straight month in February.

European markets, though falling after the latest PPI data, were buoyed by strong company earnings.

Net profit at European aircraft manufacturer Airbus soared to a record 4.2 billion euros ($4.5 billion) in 2022 despite supply chain problems limiting its ability to increase production.

The good times also continued for energy firms.

Britain’s biggest domestic energy supplier Centrica said its operating profits more than tripled to £3.3 billion ($4.0 billion) in 2022, sparking fury as Britons face soaring household electricity and gas bills.

Spain’s Repsol joined Shell, ExxonMobil and others in announcing bumper profits for 2022 on the back of soaring oil and gas prices.

Germany’s second-largest lender Commerzbank said its net profit tripled in 2022, becoming the latest European bank to report bumper earnings thanks to higher interest rates.

But inflation is challenging other companies.

Swiss food giant Nestle and French spirits group Pernod Ricard — owner of Absolut vodka and Jameson whiskey — announced fresh price hikes as they face higher production costs.

Elsewhere, bitcoin topped $25,000 for the first time since August as traders tracked the positive mood across equity markets.

Key figures around 2120 GMT 

New York – Dow: DOWN 1.3 percent at 33,696.85 points (close)

New York – S&P 500: DOWN 1.4 percent at 4,090.41 (close)

New York – Nasdaq: DOWN 1.8 percent at 11,855.83 (close)

London – FTSE 100: UP 0.2 percent at 8,012.53 (close)

Frankfurt – DAX: UP 0.2 percent at 15,533.64 (close)

Paris – CAC 40: UP 0.9 percent at 7,366.16 (close)

EURO STOXX 50: UP 0.4 percent at 4,297.24 (close)

Tokyo – Nikkei 225: UP 0.7 percent at 27,696.44 (close)

Hong Kong – Hang Seng Index: UP 0.8 percent at 20,987.67 (close)

Shanghai – Composite: DOWN 1.0 percent at 3,249.03 (close)

Euro/dollar: DOWN at $1.0673 from $1.0693 on Wednesday

Pound/dollar: DOWN at $1.1983 from $1.2039

Euro/pound: UP at 89.04 pence from 88.80 pence

Dollar/yen: DOWN at 133.96 yen from 134.12 yen

Brent North Sea crude: DOWN 0.3 percent at $85.14 per barrel

West Texas Intermediate: DOWN 0.1 percent at $78.49 per barrel

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