Global stocks mixed as central banks hike rates

The Bank of England and its peers in Switzerland and Norway further tightened their monetary policies.

With prices still rising much more than desired, central banks face pressure to hike interest rates further AFP News

Global stocks were mixed Thursday with European bourses falling after a clutch of central banks in Europe hiked interest rates again, while US equities shook off recent weakness.

The Bank of England and its peers in Switzerland and Norway further tightened their monetary policies, a week after the European Central Bank did the same.

Turkey's central bank, which for two years had followed President Recep Tayyip Erdogan's unorthodox policy of dealing with high inflation by cutting rates, changed course and nearly doubled its rate to 15 percent.

A day after data showed UK inflation remained at 8.7 percent in May, the Bank of England raised its key rate for a 13th consecutive time.

The hefty half-point increase brought the rate to five percent -- a 15-year high.

The size of the increase "has confounded market expectations," said CMC Markets UK analyst Michael Hewson.

"Today's move is tantamount to an acknowledgement that they have been materially behind the curve when it comes to the rate hiking cycle and will inevitably invite criticism that the MPC (monetary policy committee) in reacting now, is inviting a recession," he added.

Norway's central bank also chose a half-point increase, raising the rate to 3.75 percent as inflation was "markedly higher" than expected.

The Swiss central bank increased its rate by a quarter-point to 1.75 percent and warned of possibly more to come as inflationary pressure has increased.

London's blue-chip FTSE index ended the day down 0.8 percent. Frankfurt slid 0.2 percent and Paris fell 0.8 percent.

The latest rate hikes also weighed on oil prices, which fell about four percent amid fears that overly-aggressive monetary policy will hit energy demand.

Back in New York, tech shares led the market higher as both the S&P 500 and Nasdaq ended three-day losing streaks.

The gains came as Federal Reserve officials continued to vow an aggressive stance on inflation. Fed governor Michelle Bowman said more rate increases were probably needed "to meaningfully and durably bring inflation down."

But investors are skeptical the Fed will follow through.

"The market just doesn't believe it," said Quincy Krosby of LPL Financial, adding that many expect an improvement in US inflation data that will be released ahead of the Fed's next decision.

Among individual companies, Boeing shares shed 3.1 percent after Spirit AeroSystems, a key supplier on the 737 MAX, announced it was suspending factory production.

This came after workers represented by the International Association of Machinists and Aerospace Workers rejected a new contract.

Spirit shares dropped 9.4 percent.

New York - Dow: FLAT at 33,946.71 (close)

New York - S&P 500: UP 0.4 percent at 4,381.89 (close)

New York - Nasdaq: UP 1.0 percent at 13,630.61 (close)

London - FTSE 100: DOWN 0.8 percent at 7,502.03 (close)

Frankfurt - DAX: DOWN 0.2 percent at 15,988.16 (close)

Paris - CAC 40: DOWN 0.8 percent at 7,203.28 (close)

EURO STOXX 50: DOWN 0.4 percent at 4,304.47 (close)

Tokyo - Nikkei 225: DOWN 0.9 percent at 33,264.88 (close)

Hong Kong - Hang Seng Index: Closed for holiday

Shanghai - Composite: Closed for holiday