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FTSE flat on stronger pound and Wall Street advances as jobless claims rise

How major markets are performing on Thursday

NEW YORK, NEW YORK - MAY 03: People walk along Wall Street outside of the New York Stock Exchange (NYSE) on May 03, 2023 in New York City. The Dow was slightly lower in morning trading as investors wait to see later today if the Federal Reserve will continue to raise interest rates. (Photo by Spencer Platt/Getty Images)
FTSE falls and Wall Street advances amid strengthening pound. (Spencer Platt via Getty Images)

European stock markets were mainly in the red on Thursday, while Wall Street advanced, as UK house prices rose for a second month in a row and US jobless claims also rose.

In London, the FTSE 100 (^FTSE) was trading flat by the end of the day, as a strengthening pound weighed on the exporter-heavy index and while elevated government bond yields also dampened risk appetite.

The CAC (^FCHI) was treading water in Paris and the Frankfurt DAX (^GDAXI) was also 0.1% lower, retreating from its record high on Wednesday. The STOXX 600 (^STOXX) was 0.2% down at the time of writing.

The personal goods sector led declines early on, falling more than 2%.

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Across the pond, the S&P 500 (^GSPC) rose 0.5% by the time of the European close, and the tech-heavy Nasdaq (^IXIC) was 0.9% higher. The Dow Jones (^DJI) was flat.

"The outperformance on European markets appears to be being driven by the increasing belief that the European Central Bank may well be forced into cutting rates sharply in the early part of 2024 in response to sharply slowing inflation and a sclerotic economy," Michael Hewson, chief market analyst at CMC Markets UK, said.

"The last few days has seen a sharp decline in bond yields reflecting an increasing belief on the part of investors that rather than higher for longer, central banks will start cutting rates as soon as Q2 next year.

"The shift in tone has been most notable from several ECB policymakers who have indicated that rate hikes are done."

Meanwhile, Neil Wilson at Markets.com said: "The market is already pricing in a lot of cuts next year and it’s unclear if the narrative can hold beyond the FOMC and ECB next week. Soft jobs figures so far are not undermining it."

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It came as average UK property values climbed 0.5% to £283,615 in November, some £1,300 more than October, according to new figures from lender Halifax.

It was the second monthly gain in a row after six consecutive falls before that. This was thanks to a shortage of properties available on the market and some mortgage relief.

However, it was still a 1% drop compared with the same time a year ago, and a steep fall from the 3.1% decline in the year to October.

Read more: UK house prices rise in November amid property shortage

Kim Kinnaird, director at Halifax Mortgages, said: “The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand.”

She added: “With mortgage rates starting to ease slightly, this may be leading to increased buyer confidence, seeing people more inclined to push ahead with their home purchases.”

Meanwhile, the number of Americans applying for jobless benefits rose last week, new data from the Labour Department revealed. Overall the number of people in the US collecting unemployment benefits fell after hitting its highest level in two years last week.

Unemployment benefits claims rose by 1,000 to 220,000 for the week ending 2 December, in line with analyst expectations.

Around 1.86 million were collecting unemployment benefits the week that ended 25 November, 64,000 fewer than the previous week. It was the second time in 11 weeks that continuing claims have fallen.

Watch: How does inflation affect interest rates?

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