Stocks waver after hitting record highs

Stock markets wavered Thursday following record-breaking rallies that were fuelled by cooling US inflation, though Wall Street pushed ahead with the Dow topping the 40,000-point mark mid session for the first time.

The Dow, the broad-based S&P 500 and the tech-heavy Nasdaq built on gains from the day before following an inflation report that revived hopes of Federal Reserve interest rate cuts. The trio of indices pushed 0.3 percent higher, aided by strong Walmart earnings on better-than-expected profits.

"The Guinness Book of World Records will need updating given the performance of stock markets this year," said Dan Coatsworth, investment analyst with AJ Bell.

“Investors have been pumped up by the latest inflation reading, believing it is cool enough to stir the Federal Reserve into action and cut rates in the near future."

London -- despite telecoms group BT soaring 17 percent -- Paris and Frankfurt in contrast ended in the red, one day after striking their own records over expectations of rate cuts in the eurozone and the UK.

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"Profit-taking is likely to be the main driver behind today's weakness in stocks," City Index analyst Fawad Razaqzada told AFP on European trading as there was no major news to send stocks lower.

"European markets have failed to follow the bullish theme set in the United States," said Scope Markets analyst Joshua Mahony.

Asian equities rallied Thursday after US data showed inflation cooled last month, fuelling speculation that the Federal Reserve will cut interest rates twice this year and sending Wall Street to record heights on Wednesday.

US inflation came in at 3.4 percent in April on an annual basis, down from 3.5 percent in March, data showed Wednesday.

The April reading was in line with forecasts and capped a run of three straight months above estimates that had forced investors to reel in their rate cut hopes.

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Sentiment was given an extra boost by figures showing retail sales well below expectations, suggesting consumers were taking a step back.

Fed data on Thursday showed US factory output was flat in April, missing analyst expectations of a third straight monthly increase.

Yet traders remain anxious because US inflation remains well above the Fed's two-percent target.

The Fed is now tipped to reduce borrowing costs twice before the end of the year, an increase on the one previously predicted -- though a lot fewer than the six estimated in January.

Oil prices rallied after previously dropping over concerns about demand.

Key figures around 1600 GMT

New York - Dow: UP 0.3 percent at 40,028.70 points

New York - S&P 500: UP 0.3 percent at 5,322.26

New York - Nasdaq Composite: UP 0.3 percent at 16,784.60

London - FTSE 100: DOWN 0.1 percent at 8,438.65 (close)

Paris - CAC 40: DOWN 0.6 percent at 8,188.49 (close)

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Frankfurt - DAX: DOWN 0.7 percent at 18,738.81 (close)

EURO STOXX 50: DOWN 0.6 percent at 5,070.89 (close)

Tokyo - Nikkei 225: UP 1.4 percent at 38,920.26 (close)

Hong Kong - Hang Seng Index: UP 1.6 percent at 19,376.53 (close)

Shanghai - Composite: UP 0.1 percent at 3,122.40 (close)

Euro/dollar: DOWN at $1.0871 from $1.0886 on Wednesday

Dollar/yen: UP at 155.36 yen from 154.83 yen

Pound/dollar: DOWN at $1.2673 from $1.2681

Euro/pound: UP at 85.82 from 85.77 pence

Brent North Sea Crude: UP 0.4 percent at $83.07 per barrel

West Texas Intermediate: UP 0.6 percent at $79.06 per barrel

Source: AFP