Stock markets mostly climbed and the dollar diverged Friday awaiting key US inflation data and with focus on upcoming global elections and yen weakness.
Traders are waiting on the personal consumption expenditures index reading — the Federal Reserve’s preferred gauge of inflation that could help determine its plans for cutting interest rates.
The PCE report is tipped to show a further slowdown in prices, though there is a fear that a forecast-busting reading could dent hopes for a cut this year, while a lower-than-expected figure could ramp up bets for more than one before January.
“US inflation numbers dominate the agenda,” Russ Mould, investment director at AJ Bell, noted Friday.
“The market is likely to react positively if inflation comes in as expected as it would boost confidence that we’re only a stone’s throw away from the Fed cutting rates.”
Fed officials have tried to temper rate-cut expectations, warning they wanted to see more evidence that inflation was being brought under control.
On Thursday, the bank’s Atlanta boss Raphael Bostic said he saw one reduction this year.
Investors meanwhile digested an election debate Thursday between US President Joe Biden and his predecessor Donald Trump.
Wall Street closed higher ahead of the exchange — widely viewed as a victory for Trump.
On Friday, the Paris stock market dropped before France’s weekend first-round legislative polls.
President Emmanuel Macron’s centrist alliance was facing potential defeat to a surging far right, whose spending plans could put Paris on course for a standoff with the European Union.
That is followed by Britain’s general election on Thursday, which is expected to see the ruling Conservatives of Prime Minister Rishi Sunak ousted after 14 years in government and replaced by the main opposition Labour Party.
Official data Friday showed the UK economy’s recovery from recession was stronger than previously thought in the first quarter.
In Asia, the yen extended losses to hit a fresh 38-year low Friday, putting investors on guard for a possible intervention by Japanese authorities.
Asian equity markets mostly closed higher.
London – FTSE 100: UP 0.6 percent at 8,227.54 points
Paris – CAC 40: DOWN 0.3 percent at 7,511.52
Frankfurt – DAX: UP 0.6 percent at 18,326.08
EURO STOXX 50: UP 0.3 percent at 4,915.30
Tokyo – Nikkei 225: UP 0.6 percent at 39,583.08 (close)
Hong Kong – Hang Seng Index: FLAT at 17,718.61 (close)
Shanghai – Composite: UP 0.7 percent at 2,967.40 (close)
New York – Dow: UP 0.1 percent at 39,164.06 (close)
Dollar/yen: UP at 160.95 yen from 160.79 yen on Thursday
Euro/dollar: UP at $1.0709 from $1.0707
Pound/dollar: UP at $1.2651 from $1.2642
Brent North Sea Crude: UP 0.7 percent at $87.03 per barrel
West Texas Intermediate: UP 0.9 percent at $82.45 per barrel
