Volkswacht Bodensee - European stocks advance, AI propels US into record territory

The euro remained under pressure over France's political uncertainty, with just two weeks to go until a snap election in the country.

Switzerland's franc dipped against the dollar after the Swiss National Bank (SNB) announced its second straight interest-rate cut, having become in March the first Western central bank to slash borrowing costs that had been raised to battle inflation.

The Bank of England (BoE) held rates steady as expected ahead of UK's July 4 general election, as did Norway's central bank.

The BoE's decision to keep its key rate at a 16-year high came just a day after official data showed UK headline consumer inflation had finally come down to the bank's two percent target.

- Central banks -

Bank of England governor Andrew Bailey welcomed inflation returning to target, but said: "We need to be sure that inflation will stay low and that's why we've decided to hold rates at 5.25 percent for now."

The statement following the meeting opened the door to a rate cut in August, however, according to Kathleen Brooks, research director at trading firm XTB, pleasing the market.

"The market has taken today's news as a step in the direction of a rate cut at the next BoE meeting. The market is now pricing in a 60 percent chance of a rate cut in August, up from a 35 percent chance before the meeting," she said.

The European Central Bank cut its rate earlier this month, while the US Federal Reserve is expected to introduce only one rate reduction this year.

Central banks worldwide had ramped up borrowing costs in recent years to control inflation, which surged when economies emerged from Covid pandemic lockdowns and accelerated after energy producer Russia invaded agricultural power Ukraine in early February 2022.

A day after a public holiday, Wall Street's S&P 500 and Nasdaq Composite pushed higher at the open Thursday from record closes on Tuesday, setting new all-time highs.

Market enthusiasm for artificial intelligence has driven a surge in tech stocks, in particular Nvidia which produces high-end processors prized for AI applications.

Nvidia's market capitalisation edged past Microsoft on Tuesday to become the world's most valuable publicly traded company.

Market analyst Patrick O'Hare said it was unclear if tech stocks would continue to churn higher.

"This morning's economic data was aligned with an economic slowing that could raise questions about the achievability of earnings growth expectations and the Fed's decision to keep its policy rate higher for longer," he said.

Initial jobless claims for last week came in slightly higher than expected while housing starts fell.

Data showing slowing growth gives the Federal Reserve some freedom to ease monetary policy, but so far US central bank officials have indicated they wanted to see more evidence of inflation coming down before committing to an interest cut.

Analysts say this means there will be two reductions at most, with many predicting just one this year -- in line with the Fed's "dot plot" gauge released last week.

- Key figures around 1330 GMT -

New York - Dow: DOWN less than 0.1 percent at 38,808.77 points

New York - S&P 500: UP 0.2 percent at 5,496.42

New York - Nasdaq Composite: UP 0.3 percent at 17,917.51

London - FTSE 100: UP 0.4 percent at 8,236.60

Paris - CAC 40: UP 0.8 percent at 7,633.49

Frankfurt - DAX: UP 0.4 percent at 18,146.45

EURO STOXX 50: UP 0.8 percent at 4,923.19

Tokyo - Nikkei 225: UP 0.2 percent at 38,633.02 (close)

Hong Kong - Hang Seng Index: DOWN 0.5 percent at 18,335.32 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,005.44 (close)

Euro/dollar: DOWN at $1.0725 from $1.0745 on Wednesday

Euro/pound: UP at 84.55 pence from 84.44 pence

Dollar/yen: UP at 158.58 yen from 157.90 yen

Pound/dollar: DOWN at $1.2684 from $1.2726

West Texas Intermediate: UP 0.9 percent at $82.27 per barrel

Brent North Sea Crude: UP 1.0 percent at $85.88 per barrel

burs-rl/lth

R.Buehler--VB