Volkswacht Bodensee - Stocks fluctuate on rates outlook, Taiwan quake

Asian stocks mostly sank on scepticism that the US Federal Reserve will cut its interest rates as much as hoped this year, while a massive earthquake in Taiwan rocked sentiment.

Gold zoomed to an all-time pinnacle at $2,288.40 per ounce in Asian trade on haven demand amid geopolitical tensions and the prospect of rate cuts, extending the precious metal's record run.

Oil prices scored fresh five-month peaks on unrest in the crude-rich Middle East and an OPEC+ call for its members to maintain its strategy of reducing output.

- Euro inflation slows -

The Paris stock exchange gained 0.1 percent and Frankfurt rose 0.2 percent in afternoon deals but London's FTSE 100 index was down 0.3 percent.

Investors seized on data Wednesday showing the eurozone's annual rate of inflation decelerated to 2.4 percent last month from 2.6 percent in February thanks to a continued slowdown in food and drink price increases.

Cooling inflation and a deepening deepening downturn in the manufacturing sector "are cementing expectations that the ECB will start cutting interest rates in June, lifting stocks," City Index analyst Fiona Cincotta told AFP.

The Frankfurt-based institution has held rates steady since October 2023 after an aggressive rate-hiking campaign to tame soaring inflation.

"While the ECB appears on track to kick off its rate-cutting cycle in the current quarter, there are some doubts over whether the Fed will be able to move in the coming months," noted Cincotta.

Traders have pushed global equities higher for months, driven by optimism that the Fed will begin easing its monetary policy as soon as June as US inflation comes back towards officials' two percent target.

But forecast-busting US data on a range of indicators including inflation, factory activity and jobs has dealt a hefty blow to those hopes, and now expectations are beginning to wane.

Wall Street's Dow Jones Industrial Average and the broad-based S&P 500 were flat after the open. The tech-heavy Nasdaq was in the red.

"The market is increasingly expecting fewer rate cuts from the Fed this year, with the first rate cut currently on a knife edge between July and September," said XTB research director Kathleen Brooks.

- Asian struggles -

Markets across Asia struggled.

Tokyo sank around one percent, while Hong Kong, Sydney, Seoul and Manila were off more.

Shanghai, Singapore, Wellington and Jakarta were also well in the red, but Bangkok and Mumbai rose.

Taipei stocks fell after a deadly 7.4-magnitude earthquake just off Taiwan's east coast, which added to the regional uncertainty, though there was some relief that the threat of a tsunami had dissipated.

"Taiwan was rocked by its worst earthquake in 25 years today, sending shockwaves through markets as investors looked to gauge the potential implications to the economy and supply chains," said Scope Markets analyst Joshua Mahony.

- Key figures around 1340 GMT -

New York - Dow: FLAT at 39,169.05 points

New York - S&P 500: FLAT at 5,204.38

New York - Nasdaq: DOWN 0.3 percent at 16,199.49

London - FTSE 100: DOWN 0.3 percent at 7,915.38

Paris - CAC 40: UP 0.1 at 8,141.20

Frankfurt - DAX: UP 0.2 percent at 18,322.12

EURO STOXX 50: UP 0.3 percent at 5,058.17

Tokyo - Nikkei 225: DOWN 1.0 percent at 39,451.85 (close)

Hong Kong - Hang Seng Index: DOWN 1.2 percent at 16,725.10 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,069.30 (close)

Dollar/yen: UP at 151.93 yen from 151.56 yen on Tuesday

Euro/dollar: UP at $1.0787 from $1.0770

Pound/dollar: DOWN at $1.2573 from $1.2578

Euro/pound: UP at 85.79 pence from 85.62 pence

Brent North Sea Crude: UP 0.6 percent at $89.42 per barrel

West Texas Intermediate: UP 0.5 percent at $85.53 per barrel

burs-lth/cw

M.Schneider--VB