European stock markets lacked any real momentum on Thursday, with London’s benchmark index underperforming against its peers thanks to a stronger pound (GBPUSD=X).
The FTSE 100 (^FTSE) ended 0.1% higher on the day, feeling the drag from further weakness in oil prices (BZ=F) on the back of rising COVID cases in China. Meanwhile, the CAC (^FCHI) rose 0.5% in Paris, and the DAX (^GDAXI) was 0.8% higher in Frankfurt.
Sterling continued to gain against the US dollar to reach $1.2126 at the time of writing — a rise of 0.6% during the session. It hit $1.2131 earlier on Thursday afternoon, its highest level since mid-August.
Meanwhile, energy regulator Ofgem revealed on Thursday that the energy price cap will rise from £3,549 to £4,279 starting in January.
Ofgem said: “There is no immediate action for consumers to take as a result of today’s announcement.”
It came as European natural gas prices dropped more than 6% as EU ministers aim to resolve their differences on capping prices. A decision has been delayed until mid-December.
Across the pond on Wall Street, US stock markets were closed for the Thanksgiving holiday.
On Wednesday night, minutes from the Federal Reserve meeting pointed to support for a slower pace of rate rises, which sent Wall Street higher.
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Michael Hewson of CMC Markets said: “Last night’s Fed minutes reaffirmed the initial market reaction to the Fed statement earlier this month with most officials backing the slowing of the pace of hikes soon, with several officials seeing risks from further rapid hikes.
“This tone reinforces the narrative that 50bps is coming in December with subsequent hikes likely to be between 25bps and 50bps.
“That’s not to say that members didn’t hedge those bets with an expectation that rates might peak at a higher level than envisaged, to offset any misconceptions that the Fed might be going soft, but for now markets appear to be going with the smaller hike narrative, rather than the Powell hawkish theme.”
Bond yields declined on the back of the news. The yield on the 10-year benchmark US government debt, which influences mortgage rates, slipped to 3.69% from 3.76%.
Elsewhere, Asian shares were mostly higher on Thursday amid news of fresh economic stimulus from China.