Yahoo News FTSE closes higher and Wall Street advances as US inflation continues cooldown
A look at how the major markets are performing on Wednesday
The FTSE 100 and European stocks finished higher this Wednesday despite a report from the Bank of England that warns about rising interest rates causing stress among indebted firms and consumers.
The FTSE 100 (^FTSE) rose 1.90% to close at 7,421 points while the CAC 40 (^FCHI) in Paris gained 1.65% to 7,339 points. In Germany, the DAX (^GDAXI) climbed 1.52% to 16,029.
Across the pond, stocks were higher as inflation continued its cooldown in the US, weakening the case for more interest-rate rises from the Federal Reserve.
The Dow Jones (^DJI) rose 0.70% to 34,502 points. The S&P 500 (^GSPC) climbed 0.92% to 4,480 points and the tech-heavy NASDAQ (^IXIC) edged 1.19% higher to 13,924.
Back in London, in its stress test of the financial system, the Bank of England said the UK's eight largest lenders could survive a worst case scenario of plunging house prices, a deep recession and soaring inflation, which is supporting gains across the UK's blue chip index.
The central bank’s stress test found that lenders are “resilient” against a scenario involving persistently high inflation, rising global interest rates, deep recessions in the UK and higher unemployment.
It also said that the country has "so far been resilient" to rapidly rising interest rates. But some households and firms "may struggle with repayments" amid rising interest rates.
By the end of 2026, around a million households with a fixed-rate mortgage will have seen their monthly repayments go up by about £500, the Bank of England has said.
Read more: Interest rates push up mortgage costs for more than 4 million households
Around 4.5 million people with a fixed-rate mortgage have already seen an increase in their monthly repayments since interest rates started to rise in late 2021, the Bank found.
A growing number of mortgage holders are either extending the length of their deal or overpaying their mortgage in order to cushion the impact of higher rate.
Meanwhile, households’ use of consumer credit has increased, and the number of people falling into arrears ticked up slightly in the first quarter of 2023.
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