US and European stock markets mostly rose Friday as investors digested fresh inflation data that could set the tone for interest-rate moves by central banks.
Wall Street’s three main indices opened higher after the US Federal Reserve’s preferred metric for inflation remained unchanged in April, though the tech-heavy Nasdaq fell almost half an hour later.
The yield for two-year and five-year US Treasury bills, a proxy for interest rates, were lower on expectations that the Fed could lower borrowing costs later this year.
“Most of the market seems to be finding some comfort in the recognition that rates headed lower” after the release of the US personal consumption expenditures (PCE) index, said Briefing.com market analyst Patrick O’Hare.
The PCE index rose at an annual rate of 2.7 percent in April, the same as the previous month and in line with analyst forecasts.
“The key takeaway from the report is that the year-over-year PCE inflation rates did not worsen,” O’Hare said.
“However, they did not improve either, so it seems unlikely that the Fed would find any new confidence in this report that inflation is moving sustainably toward its two-percent.”
Bets on the number of Fed rate cuts, if any, this year have been whittled down owing to a string of outsize US data and warnings from decision-makers that they want to see strong evidence prices are under control before moving.
Most Fed policymakers have called for borrowing costs to be kept elevated for some time, while some have even advocated for another hike.
Fed officials “will need to see a sustainable trend toward lower inflation to feel confident enough to lower rates without seeing a snapback in inflation,” said Bret Kenwell, a US investment analyst at eToro.
“We’re not there yet, but the inflation reports in the month of May were a constructive first step,” he said.
In Europe, eurozone consumer inflation rose faster than expected to 2.6 percent in May after 2.4 percent in April, official data showed.
Nevertheless, the Frankfurt and Paris stock markets rose after falling earlier in the day, as analysts expect the European Central Bank to cut rates next week despite the latest inflation figures.
London’s FTSE 100 index was also up while Asia’s main equity markets closed mixed before the US data release.
Elsewhere, oil prices rose before a weekend meeting of the OPEC+ cartel that is likely to maintain its level of output cuts amid a fragile global economy.
Analysts told AFP they expected the status quo to be upheld at the online gathering Sunday even if larger cuts could boost crude prices and income for the grouping’s members, which include Saudi Arabia and Russia.
– Key figures around 1355 GMT –
New York – Dow: UP 0.1 percent at 38,140.31 points
New York – S&P 500: UP 0.1 percent at 5,240.39
New York – Nasdaq: DOWN 0.1 percent at 16.727.20
London – FTSE 100: UP 0.5 percent at 8,267.81
Paris – CAC 40: UP 0.1 at 7,987.69
Frankfurt – DAX: UP 0.1 percent at 18,515.45
EURO STOXX 50: UP 0.2 percent at 4,993.57
Tokyo – Nikkei 225: UP 0.2 percent at 38,119.96 (close)
Hong Kong – Hang Seng Index: DOWN 0.8 percent at 18,079.61 (close)
Shanghai – Composite: DOWN 0.2 percent at 3,086.81 (close)
Euro/dollar: UP at $1.0869 from $1.0834 on Thursday
Pound/dollar: UP at $1.2757 from $1.2733
Dollar/yen: DOWN at 156.70 from 156.82 yen
Euro/pound: UP at 85.17 from 85.07 pence
West Texas Intermediate: UP 0.3 percent at $78.16 per barrel
Brent North Sea Crude: UP 0.2 percent at $82.02 per barrel
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