Earlier, the European Central Bank, as widely expected, raised interest rates for the first time since 2023 after the Iran war sent oil and gas prices soaring as the Strait of Hormuz was cut off to Gulf tanker traffic.
“The rate hike should be seen as an insurance move to reinforce the ECB’s inflation fighting credibility, not as the beginning of an aggressive tightening cycle,” said Stefan Gerlach, chief economist at EFG Bank in Zurich and a former deputy governor of Ireland’s central bank.
The increase made the ECB the first of the world’s major central banks to lift borrowing costs in response to the energy shock unleashed by the US-Israeli war against Iran.
The move comes as market watchers also see a rising chance the Federal Reserve will increase interest rates later this year in light of pricing pressures.
Data Thursday showed that US wholesale prices rose sharply in May, registering their highest 12-month increase in more than three years at 6.5 per cent.
Month-on-month prices rose by 1.1 per cent, which was higher than market expectations.
In Asian stocks trading, Tokyo edged higher while Hong Kong and Shanghai declined.
Investors are also gearing up for the stock market debut of Elon Musk’s SpaceX, expected to be the biggest in history when shares start trading on Friday.
“Given there’s so much money riding on this … it could also influence broader market sentiment,” said Susannah Streeter, chief investment strategist at Wealth Club.
“A stronger, more durable debut may boost confidence in high-growth technology companies,” she said. “But a disappointing start could spark off another spurt of profit-taking across the sector” after huge gains since early this year.
