Stock markets steadier, dollar up before rate calls

US financial authorities have taken possession of California's troubled First Republic Bank, which will be acquired by JPMorgan Chase. ©AFP

London (AFP) - Stock markets were largely steady and the dollar firmed Tuesday as focus turned to interest-rate decisions due this week in the United States and eurozone.

Following a long holiday weekend for markets across Europe and Asia, trading resumed to news that annual inflation in the eurozone edged up to seven percent in April after five months of decline.

Consumer prices rose from a rate of 6.9 percent in March, which could further encourage the European Central Bank to raise interest rates once more on Thursday, according to analysts.

"Strategists are betting that we will see a slight pullback in the key core inflation data, but this has proven a stickier indicator in the eurozone than in the US and market hopes have been disappointed before," noted Matthew Ryan, head of market strategy at financial services firm Ebury.

The Federal Reserve on Wednesday announces its latest call on US borrowing costs.

Australia's central bank on Tuesday delivered a surprise interest rate hike to an 11-year high, dashing hopes it would hold them steady as inflation shows signs of slowing.

Adding to investor uncertainty were fears about the banking sector after another US regional lender went under.

Regulators on Monday announced the seizure of First Republic and that it had been sold to JPMorgan Chase, making it the second biggest bank by assets to collapse in US history.

"The collapse of First Republic saw JPMorgan step up to the plate and squash the biggest market risk on the table," said Edward Moya, analyst at Oanda trading group.

The takeover of First Republic came after the collapse of three US midsized lenders in March, including Silicon Valley Bank (SVB) and Signature Bank -- which rattled markets and raised contagion worries.

SVB's failure came after it took on too much interest rate risk, among other issues.

Nevertheless, the US central bank is widely expected to raise its benchmark lending rate for a tenth and possibly final time in the current cycle -- by another quarter-point.

Elsewhere, data showed that Hong Kong's economy grew in the first quarter, ending a disastrous year-long spell during which the finance hub was effectively closed for business owing to pandemic restrictions.