BOJ Delays Taper Plan, Tesla Shareholders Back Musk

Equities

The FTSE 100 closed 0.6% lower, reflecting a broader downward trend across European markets influenced by the Federal Reserve's updated projections for fewer US rate cuts this year. The mid-cap FTSE 250 also suffered, dropping 1.5%, marking its worst performance in nearly two months. Homebuilder Crest Nicholson saw a significant decline, with its shares tumbling 11.6%. The company issued a warning that its annual profit is expected to fall by about one-third, further compounded by an 88% decrease in half-year earnings.

Utilities and personal care sectors managed modest gains amidst the general downturn, up 0.3% and 0.5% respectively. Despite these minor upticks, the overall mood in the UK market remained subdued. Meanwhile, Halma, a technology firm, bucked the trend significantly, with its shares jumping 13.4% following a report that its full-year revenue and core profit exceeded expectations.

Shifting focus to the US, the Nasdaq Composite and the S&P 500 continued their upward trajectory, both notching record closing highs for the fourth consecutive session. This rally was supported by cooling inflation data which helped temper rate-cut expectations from the Federal Reserve. The Dow Jones Industrial Average, however, diverged slightly from this trend, closing down 65.17 points or 0.17%.

US markets were also influenced by sector-specific movements. For instance, GameStop, which has been a focal point of significant trading activity in recent years, was actively traded but the specifics of its stock performance on the day were not detailed. US Treasury yields dipped to their lowest levels since early April, while the dollar index strengthened, gaining 0.53%.

Forex & Commodities

On Thursday, despite a dovish signal from the Federal Reserve and soft US producer price inflation data for May, the US dollar strengthened. The dollar index was up 0.49% at 105.20, having touched a four-week high of 105.46 earlier in the week. This rally followed a brief drop after Wednesday's consumer price index report came in softer than expected, hinting at easing inflationary pressures but not enough to dampen the dollar's rebound.

The euro, in contrast, weakened against the dollar, down 0.65% to $1.0739. Political uncertainty in Europe, highlighted by French President Emmanuel Macron’s call for a snap election, has kept the euro under pressure. The yen also fell to 156.89 against the dollar, as markets anticipate the Bank of Japan's potential bond buying trim, expected to be detailed in their next meeting.

In commodities, oil prices ended slightly higher after a volatile trading day, with US crude settling up 0.15% at $78.62 per barrel and Brent crude finishing at $82.75 per barrel, an increase of 0.18%. This was in spite of the potential delay in rate cuts by the Fed, which was somewhat offset by the economic data released. Gold prices, however, moved in the opposite direction, dropping 0.8% to $2,303.15 an ounce, influenced by the strengthening dollar and weaker-than-expected Producer Price Index (PPI) data.