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Global stock markets rose Friday as data showed weak-but-positive growth in the eurozone and a key US inflation gauge slowed. news online
European equities ended the session in positive territory after a morning in the red, shrugging off official data confirming that the eurozone economy only just eked out growth in the first three months of the year.
On Wall Street, the Dow Jones Industrial Average pushed higher, as traders digested mixed earnings and economic data ahead of a key Federal Reserve meeting next week.
The Fed’s favoured measure of inflation slowed substantially last month, providing relief to the US central bank as it mulls another interest-rate hike to tackle rising prices.
The annual personal consumption expenditures price index (PCE) eased to 4.2 percent in March from a revised 5.1 percent a month earlier, with a sharp decline recorded in energy prices, according to data released by the Bureau of Economic Analysis.
“Today’s PCE data was pretty much as expected but is trending in a good direction for those hoping for inflation to moderate,” analysts for Charles Schwab said in a note.
The United States on Thursday revealed that the economy had slowed more than expected in the first quarter.
Hard on its heels were Friday’s official data showing the eurozone economy expanded just 0.1 percent in the first quarter over the previous three months, as high inflation and interest rates weigh on activity.
“The very small increase in (eurozone) GDP… means a technical recession has been avoided by a whisker,” noted Capital Economics’ chief Europe economist Andrew Kenningham.
“However, the economy has essentially stalled as domestic demand has been hit hard by the energy shock followed by monetary tightening.”
Germany, the EU’s biggest economy, saw growth stagnate at zero percent over the previous quarter.
Focus now turns to the Fed’s monetary policy meeting next week as well as a meeting of the European Central Bank to decide on rates.
“After a poor start to the day, European markets have recovered well, performing a hand-brake turn in the afternoon session,” Chris Beauchamp, chief market analyst at online trading platform IG, said.
“But a firm break higher still eludes most indices, and might well continue to do so next week with so much major news to digest.”
Kill the beast
The market expects the US central bank to consider strong consumer spending and a drop in weekly jobless claims as evidence that the economy can take more inflation-fighting interest-rate hikes.
On Friday, the International Monetary Fund’s department director for Europe, Alfred Kammer, urged the continent’s central banks to “kill the beast” of inflation by continuing to hike interest rates.
The Bank of England has ramped up its own borrowing costs since the end of 2021, while markets fear that carrying on down a path of monetary tightening could tip the world economy into recession.
On the corporate front Friday, US oil giants ExxonMobil and Chevron reported another quarter of higher profits.
Strong refining results offset the effect of lower crude prices in the first quarter compared with the year-ago period, lifting profits and enabling both companies to direct large cash payments to shareholders.
Amazon tumbled despite reporting better-than-expected earnings on concerns about weakening demand in its cloud computing business.
Asian equity indices closed higher after strong gains Thursday on Wall Street as largely well-received earnings from US tech giants this week helped to offset global recession fears.
Key figures around 1550 GMT
London – FTSE 100: UP 0.5 percent at 7,870.57 points (close)
Frankfurt – DAX 40: UP 0.8 percent at 15,922.38 (close)
Paris – CAC 40: UP 0.1 percent at 7,491.50 (close)
EURO STOXX 50: UP 0.03 percent at 4,359.31
New York – Dow: UP 0.6 percent at 34,009.83
Hong Kong – Hang Seng Index: UP 0.3 percent at 19,894.57 (close)
Shanghai – Composite: UP 1.1 percent at 3,323.27 (close)
Tokyo – Nikkei 225: UP 1.4 percent at 28,856.44 (close)
Euro/dollar: UP at $1.1041 from $1.1033 on Thursday
Pound/dollar: UP at $1.2578 from $1.2498
Dollar/yen: UP at 135.97 yen from 134.02 yen
Euro/pound: DOWN at 87.76 pence from 88.24 pence
Brent North Sea crude: UP 2.4 percent at $80.11 per barrel
West Texas Intermediate: UP 2.2 percent at $76.41 per barrel
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