European stocks climb, pound stalls on mixed data

European stock markets climbed Friday but the pound and euro fell as traders assessed mixed growth and inflation data.

The pound jumped on revised figures showing the UK economy had avoided recession -- but it swiftly fell back on expectations of an eventual downturn owing to sky-high inflation.

In the eurozone, consumer prices rocketed a record 10 per cent in September on soaring energy prices caused by Russia’s war on Ukraine, separate official data showed.

Stock markets are bouncing back... although I don’t think anyone is getting excited by the moves which pale in comparison to the losses that preceded them, noted OANDA senior market analyst Craig Erlam.

This looks like nothing more than a dead cat bounce after a steep decline over the last couple of weeks as investors have been forced to once again accept that interest rates are going to rise further and faster than hoped. In the United States, Federal Reserve officials have again reiterated their intention to ramp up rates until they have tamed inflation, even if that means plunging the world’s top economy into recession.

The case for a fourth successive 0.75-percentage point lift was strengthened by news Thursday that first-time unemployment benefit claims fell below 200,000 for the first time since May.

All three main indices on Wall Street finished deep in the red Thursday, with the S&P 500 ending at its lowest level since November 2020.

In Asia on Friday, Shanghai dropped as data showed China’s manufacturing and services sectors struggled again in September from Covid lockdowns in parts of the country that have battered the world’s number-two economy.

There was also little reaction to news that Beijing would allow some cities to reduce mortgage rates for first-home purchases as it tries to support the property market.