Oil Prices Drop, Stocks Diverge Amid Economic Growth Fears

Japanese stocks rose Thursday as traders weigh a central bank policy announcement and markets digested data showing the US economy shrinking in the first quarter AFP

Oil prices fell and stocks were mixed on Thursday in thin holiday trading, following weak US economic data that added to growth concerns.

Several markets were shut in Europe and Asia for the May 1 holiday, including in France, Germany, Hong Kong and mainland China.

Among markets that were open, London was flat, while Tokyo climbed over one percent after Japan's central bank kept its key interest rate steady and warned of trade uncertainty.

Oil plunged under $60 per barrel, weighed down by disappointing economic data from the US on Wednesday and on expectations that OPEC+ will increase production more than expected in June.

Lower oil prices impacted energy giants BP and Shell, with their shares falling three percent and two percent respectively on London's FTSE 100 index.

"Oil prices are at lows not seen since the pandemic, as concerns about the trade hit to global growth keep swirling," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

"As economies are expected to slow, demand for energy is set to follow suit," she added.

Tokyo's main Nikkei 225 index closed 1.1 percent higher after the central bank's decision to hold rates caused the yen to fall against the dollar, boosting Japanese exporters.

The Bank of Japan warned that trade tariffs are fuelling global economic uncertainty and revised down its growth forecasts for the world's fourth-largest economy.

US President Donald Trump has imposed hefty levies on trading partners and imports including steel, aluminium and autos to rectify what he says are unfair trade imbalances.

Markets are looking ahead to Friday's US jobs data for April for indications of the Federal Reserve's path for interest rates.

"All that matters for the Fed is the jobs market so we head into a big risk event with tomorrow's payrolls report," said Neil Wilson, UK investor strategist at Saxo Markets.

Wall Street stocks opened sharply lower on Wednesday after US government data showed the economy shrank by an annual rate of 0.3 percent in the first quarter, amplifying recession worries.

But they moved gradually higher through the day, rising after mid-morning data showed personal spending in March topped estimates.

As more companies pull back from earnings forecasts in the face of the uncertainty regarding US tariffs, tech giants Meta and Microsoft reported quarterly profits that were above expectations on Wednesday.

Shares in Meta -- which owns Facebook, Instagram and WhatsApp -- rose more than four percent in after-market trades.

Investors are now awaiting earnings from US giants Amazon and Apple later in the day for further signals of the impact of tariffs on businesses.

London - FTSE 100: FLAT at 8,497.13 points

Paris - CAC 40: closed for holiday

Frankfurt - DAX: closed for holiday

Tokyo - Nikkei 225: UP 1.1 percent at 36,241.70 (close)

Hong Kong - Hang Seng Index: closed for holiday

Shanghai - Composite: closed for holiday

New York - Dow: UP 0.4 percent at 40,669.36 (close)

Euro/dollar: DOWN at $1.1333 from $1.1342 on Wednesday

Pound/dollar: UP at $1.3338 from $1.3328

Dollar/yen: UP at 144.29 yen from 143.18 yen