US Stocks Advance, Europe Marks Time
US stock markets rose on Friday as data showed consumers are splurging, while European equity markets were mixed and Asian stocks pulled back as virus outbreaks mount.
US retail sales rose 0.6 percent in June, beating analyst expectations of a 0.6 percent drop. Excluding sales of cars, where a lack of computer chips has disrupted production, sales were up 1.3 percent from May.
“The key takeaway from the report is the stronger-than-expected read for the ex-auto figure, which reflects the unleashing of pent-up demand on the part of consumers flush with cash and a desire to leave their house,” said market analyst Patrick J. O’Hare at Briefing.com.
That helped Wall Street open higher, with the Dow adding 0.2 percent.
In Europe, traders digested data confirming eurozone inflation had slowed in June to 1.9 percent from 2.0 percent in May, which suggested that price pressures remain elevated.
In afternoon eurozone trade, the Frankfurt stock index was up less than 0.1 percent and Paris was off by 0.3 percent.
London gained 0.2 percent, aided in part by upbeat quarterly sales from fashion house Burberry.
“European stocks have seen a solid run-up across the (first) quarter, but the momentum behind the rally has stalled recently,” noted Oanda analyst Sophie Griffiths.
“Strong corporate earnings data could go some way to negating the lingering Covid concerns,” she added.
Sentiment was also subdued owing to dovish comments from Federal Reserve chief Jerome Powell, who reiterated the US central bank’s plans to maintain stimulus initiatives until the economy has fully recovered.
Treasury Secretary Janet Yellen meanwhile warned that inflation would remain elevated for months to come.
“I think we will have several more months of rapid inflation, so I’m not saying that this is a one-month phenomenon,” Yellen said Thursday during an interview with CNBC after US markets had closed.
However she predicted that price increases would reach “normal levels” over the medium term.
Asian markets mostly fell on Friday, with Tokyo closing one-percent lower as investors considered expanding Covid-19 infections and the Bank of Japan trimmed its economic growth forecast for the current fiscal year.
Hong Kong’s leading index was flat as late profit-taking wiped out earlier gains ahead of an advisory from US President Joe Biden later Friday.
He is expected to warn firms about doing business there as Beijing clamps down.
“The situation in Hong Kong is deteriorating. And the Chinese government is not keeping its commitment that it made how it would deal with Hong Kong,” Biden said Thursday at a press conference with visiting German Chancellor Angela Merkel, signalling no imminent improvement in Sino-US relations.
Shanghai closed 0.7 percent lower while Seoul, Taipei, Kuala Lumpur and Bangkok also retreated. Wellington was flat while Sydney, Singapore, and Jakarta ticked higher.
London – FTSE 100: UP 0.2 percent at 7,022.30 points
Frankfurt – DAX 30: UP less than 0.1 percent at 15,638.92
EURO STOXX 50: DOWN 0.1 percent at 4,052.30
New York – Dow: UP 0.2 percent at 35,066.04
Hong Kong – Hang Seng Index: FLAT at 28,004.68 (close)
Shanghai – Composite: DOWN 0.7 percent at 3,539.30 (close)
Euro/dollar: DOWN at $1.1810 from $1.1812 at 2100 GMT Thursday
Pound/dollar: DOWN at $1.3818 from $1.3829
Euro/pound: UP at 85.46 from 85.42 pence
Dollar/yen: UP at 110.29 from 109.83 yen
Brent North Sea crude: UP 0.5 percent at $73.83 per barrel
West Texas Intermediate: UP 0.6 percent at $72.11 per barrel