NEW YORK: Global stock markets mostly climbed on Friday — a positive end to a week in which the threat of inflation spooked investors, but not enough to scuttle the rally.
Major US indices all gained, with the broad-based S&P 500 adding 0.7 percent, paring their losses for the week. But London’s FTSE bucked the bullish feeling, falling 0.5 percent.
It was the second straight day of gains on Wall Street, amid a sense traders may have overreacted to the inflation data on Wednesday.
“Inflation is running super-hot,” said Neil Wilson, chief markets analyst at Markets.com, pointing to multi-decade highs of key gauges in the United States, Japan and China.
Investors were spooked Wednesday following official US data showing annual consumer price inflation hit a 30-year high, which could force the Federal Reserve to hike interest rates more quickly to contain prices.
A survey from the University of Michigan released Friday said US consumer sentiment fell to a 10-year low amid concerns that growing inflation is undermining purchasing power.
But economists say sentiment should recover once global supply snarls are resolved, and consumers are unlikely to pull back on spending. The inflation trend is global, and data Friday showed German wholesale prices jumped 15.2 percent year-on-year in October, the strongest jump since March 1974 and an acceleration from the previous two months. “Yet investors don’t seem that bothered,” Wilson said. “Ultimately, the market remains fairly comfortable with fundamentals” and with central banks keeping rates low, “equities remain the only game in town.”
While inflation headwinds are clearly spooking some, persistently low interest rates are leaving yield-hungry investors with few options other than to keep their faith in stocks — a scenario analysts dub TINA (there is no alternative).
“Equities can’t continue to hold firm against this backdrop but in a TINA world, stranger things have happened,” said Oanda analyst Craig Erlam, pointing to surging gold prices and the strengthening dollar.
Those inflation safe havens rose again on Friday, with gold up 0.2 percent to $1,867.70 an ounce. “Investors turned to an old friend in time of need,” Erlam said. Markets are looking to see if the global inflation spurt will ease as supply chain disruptions and wage hikes normalize, and businesses recover from their pandemic hit.
Key figures
Dow: UP 0.5 percent
S&P 500: UP 0.7 percent
Nasdaq: UP 1.0 percent
FTSE 100: DOWN 0.5 percent
DAX: UP 0.1 percent
Paris - CAC 40: UP 0.5 percent
EURO STOXX 50: UP 0.3 percent
Nikkei 225: UP 1.1 percent
Hong Kong: UP 0.3 percent
Shanghai: UP 0.2 percent
Euro/dollar: DOWN at $1.145
Pound/dollar: UP at $1.3413
Dollar/yen: DOWN at 113.85 yen
Euro/pound: DOWN at 85.33 pence
Brent North Sea crude: DOWN 1.0 percent
West Texas Intermediate: DOWN 1.1 percent.
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