Stock markets retreat while oil prices advance

European and US equities mostly retreated on Wednesday amid profit-taking while oil prices jumped above $80 per barrel as the threat of attacks keep ships out of the Red Sea.

London bucked the trend, with the blue-chip FTSE 100 index rising and the pound fell as news of sharply slowing inflation stoked hopes of a Bank of England interest rate cut.

Wall Street opened lower after the Dow closed Tuesday at a fifth-straight record high.

"The major indices have gone parabolic since late October and are apt to run into some profit-taking activity," said Briefing.com analyst Patrick O'Hare.

The rally was touched off by slowing inflation prompting bets by investors that central banks, which hiked interest rates to get a grip on rising prices, will be able to begin cutting interest rates next year.

The rally was also based on the assumption that the US economy will make a soft landing — meaning it would avoid a recession.

O'Hare pointed as well to FedEx's results and guidance causing some concerns about softness in the economy.

The shipping giant reported a drop in volume and said it now expects a small drop in revenue in its fiscal year that runs through March.

FedEx shares fell 10 percent at the start of trading.

In Europe, data showed UK inflation slowed in November to 3.9 percent — the lowest rate since September 2021.

Britain has had the most stubborn inflation and the data sparked speculation the Bank of England could now decide to start cutting interest rates next year, having lifted them to a 15-year peak of 5.25 percent in order to bring down inflation from double digits.

However, concerns persist after core inflation — which strips out food and energy costs — eased only slightly to stand at 5.2 percent in November.

"The FTSE 100 has enjoyed a welcome boost, with markets reacting to a surprise slump in UK CPI that lifted expectations for a May rate cut from the BoE," said Scope Markets analyst Joshua Mahony.

Elsewhere, Asian stocks mostly rallied after another record Wall Street performance Tuesday as traders bet on the US Federal Reserve slashing interest rates several times next year.

The advances come even as central bank officials try to push back against expectations, which have set markets up for a healthy end-of-year rally.

The next key event this week will be the release of the US personal consumption expenditures (PCE) price index, which is the Fed's preferred gauge of inflation.

The reading's fall in recent months, along with consumer prices and a slowing jobs market, has been among the main reasons Fed decision-makers are feeling confident that they are on the right track.

Still, they are trying to prevent investors getting ahead of themselves by tempering expectations.

Oil prices extended their recent rally, which was fuelled by companies suspending transit via the Red Sea owing to attacks on cargo ships by Yemen's Iran-backed Huthi rebels in solidarity with Gaza.

According to the International Chamber of Shipping, a London-based trade association for shipping firms, 12 percent of global trade passes through the Red Sea.

Travelling around Africa can add a week to travel between Asia and Europe, causing supply chain disruptions and raising transportation costs.

Key figures around 1430 GMT

New York – Dow: DOWN 0.2 percent at 37,482.94 points

London – FTSE 100: UP 0.8 percent at 7,701.07

Paris – CAC 40: DOWN less than 0.1 percent at 7,567.69

Frankfurt – DAX: DOWN less than 0.1 percent at 16,730.92

EURO STOXX 50: DOWN 0.2 percent at 4,525.91

Tokyo – Nikkei 225: UP 1.4 percent at 33,675.94 (close)

Hong Kong – Hang Seng Index: UP 0.7 percent at 16,613.81 (close)

Shanghai – Composite: DOWN 1.0 percent at 2,902.11 (close)

Euro/dollar: DOWN at $1.0965 from $1.0981 on Tuesday

Dollar/yen: DOWN at 143.37 yen from 143.84 yen

Pound/dollar: DOWN at $1.2670 from $1.2732

Euro/pound: UP at 86.52 pence from 86.24 pence

West Texas Intermediate: UP 1.6 percent at $75.14 per barrel

Brent North Sea crude: UP 1.5 percent at $80.40 per barrel