Yahoo Finance LIVE: FTSE and Wall Street rise as IMF lifts global growth forecast to 3%
A look at how the major markets are performing on Tuesday
European stock markets were fairly muted on Tuesday, with Wall Street following its lead, as the International Monetary Fund (IMF) revealed that the UK is set to be second worst economy in the G7.
On Tuesday it said the UK’s output is forecast to grow by 0.4% this year, faster than Germany which is set to shrink by 0.3%, but slower than any other country in the G7.
Growth in the US is expected to be the most rapid of all G7 countries at 1.8%. This will be followed by Canada (1.7%), Japan (1.4%), Italy (1.1%), France (0.8%), the UK (0.4%) and Germany (-0.3%).
It added that interest rates in the UK will need to stay higher for longer than previously thought in order to tackle runaway inflation.
In London, the FTSE 100 (^FTSE) ended 0.2% higher, with mining stocks among top gainers, while the CAC (^FCHI) lost almost 0.3% in Paris, and the Frankfurt DAX (^GDAXI) was flat.
It came as new data also revealed that Britain faces the highest debt burden in the G7. A new report from credit rating agency Fitch showed that governments across the world face a steep rise in interest spending on their debts compared to pre-pandemic levels.
Developed countries face paying 47% more than in 2020, while the bill for emerging market countries has jumped 40%. But the UK is set to pay a bigger bill than other major economies. Countries will pay around $2.3tn (£1.8tn) in interest costs in 2023, it calculated.
Ed Parker, global head of research for sovereigns and supranationals at Fitch, said: "We’ve had a very large inflation shock which is adversely affecting the public finances and that is obviously a key driver of the sovereign credit rating.”
“Stocks continued to trade sideways in Europe on Tuesday as traders brace for earnings from some of the biggest corporations while key central bank meetings loom later this week," Pierre Veyret, technical analyst, at ActivTrades, said.
"Market sentiment remains muted, and markets trade without clear direction ahead of some of the most significant macro developments brought by the highly awaited monetary decisions from the Fed (tomorrow) and the ECB (on Thursday).”
He added: “While a lingering hawkish stance from both is broadly expected, the semantics used by these central bankers during their press conference will be cautiously scrutinised by investors, looking for more hints on where the current tightening cycles may end.”
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