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FTSE 100 rises and Wall Street mixed as US and EU inflation eases

How major markets are performing on Thursday

FTSE 100: Christine Lagarde, President of the European Central Bank
The FTSE 100 and European stock markets pushed higher on Thursday after EU inflation data. (Anadolu via Getty Images)

European stock markets pushed higher on Thursday, as Wall Street was on mixing footing, on the back of easing inflation data in both the US and in the European Union (EU).

In London, the FTSE 100 (^FTSE) was trading 0.5% higher, while the CAC (^FCHI) also gained 0.5% in Paris despite the French economy shrinking unexpectedly in the last quarter.

The Frankfurt DAX (^GDAXI) was 0.3% higher on the day, and the STOXX 600 (^STOXX) advanced 0.5% during the session.

Across the pond, the S&P 500 (^GSPC) fell 0.5%, and the tech-heavy Nasdaq (^IXIC) was 0.6% lower. The Dow Jones (^DJI) however, advanced 0.8% by the time of the European close.

It came as as traders digested news that EU inflation fell to 2.4% this month, nearing the European Central Bank's (EBC) target of 2%. The drop was sharper than expected as falling energy prices ease the cost of living crisis.

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According to statistics body Eurostat, this was down from 2.9% the month before, and was the slowest annual pace since July 2021 across the single currency bloc.

Economists had forecast that the inflation rate would fall to 2.7%.

Core inflation, which excludes volatile food and energy prices, fell from 4.2% to 3.6%, ahead of estimates of a drop to 3.9%.

Economists are now expecting the European Central Bank (ECB) to start cutting interest rates in June rather than September.

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The latest flash CPI inflation numbers from Germany and Spain that were released yesterday, showing that inflation in Europe is tumbling at an accelerated rate.

Meanwhile, updated GDP data released this morning showed that France’s economy contracted by 0.1% in the period from July to September.

This was worse than the first estimate of 0.1% growth for Q3, and follows growth of 0.6% in Q2.

"Yesterday saw a broadly positive session for markets in Europe with the DAX outperforming, while the FTSE100 slipped back for the third day in succession, in a month which has seen the UK benchmark underperform significantly compared to the rest of its peers," Michael Hewson, chief markets analyst of CMC Markets, said.

"The DAX and S&P 500 look set post their best month of gains since November last year as investors start to price in the prospect of rate cuts next year in the face of sharply slowing inflation."

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Meanwhile, across the pond, the Federal Reserve’s preferred measure of US inflation fell further than expected last month as traders look to further interest rate cuts in the first half of next year.

The personal consumption expenditure (PCE) index came in at 3% in the year to October, down from 3.4%. This was lower than the 3.1% expected.

Core PCE, which excludes volatile food and energy prices, slowed from 3.7% to 3.5%.

Watch: How does inflation affect interest rates?

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