Asian and European stock markets traded mixed Friday as a drop in US jobsless claims revived expectations of two more interest-rate hikes from the Federal Reserve, adding to worries about China’s economy.
Wall Street diverged Thursday with a sell-off for the Nasdaq as earnings from Netflix and Tesla disappointed, while the Dow closed higher.
Additionally, “there has been talk of a worsening of the conflict in Ukraine, a further slowdown in China and major US banks facing significant real estate losses”, noted Lewis Grant of Federated Hermes.
“Each of these threats, along with uncountable unknowns, has the potential to halt the sentiment rebound in its tracks.”
The Russian Central Bank on Friday hiked its key interest rate to 8.5 percent, a first since September last year, amid fears that a weakening ruble will drive up inflation in the country.
While next week’s Fed policy decision is highly anticipated, traders are also keeping an eye on Beijing, hoping for some movement on plans to kickstart China’s economy, the world’s second largest after the United States.
Officials have unveiled various pledges, particularly to help embattled developers, but apart from a small rate cut last month, there has been very little of substance.
There is hope, however, for something at a key meeting at the end of July.
On currency markets, the yen rallied briefly against the dollar after data showed Japanese inflation picked up speed in June, which some saw as putting further pressure on the Bank of Japan to tighten policy.
However, the yen later slid more than one percent as observers suggested the figures were unlikely to shift monetary policymakers from their ultra-loose stance.
The central bank is expected to stand pat at its meeting next week, after governor Kazuo Ueda’s recent dovish comments.
Elsewhere, the pound fell against the euro and dollar.
Britain’s ruling Conservatives on Friday held the former seat of ex-Prime Minister Boris Johnson but saw hefty majorities in two other constituencies blown away as voters responded to scandals during his tenure and high inflation.
London’s benchmark FTSE 100 index was meanwhile “on course to close out its best week in months in solid fashion… as June (UK) retail sales beat expectations”, said Danni Hewson, head of financial analysis at AJ Bell.
Key figures around 1115 GMT
London – FTSE 100: UP 0.1 percent at 7,654.00 points
Frankfurt – DAX: DOWN 0.4 percent at 16,133.78
Paris – CAC 40: UP 0.3 percent at 7,406.94
EURO STOXX 50: FLAT at 4,373.96
Tokyo – Nikkei 225: DOWN 0.6 percent at 32,304.25 (close)
Hong Kong – Hang Seng Index: UP 0.8 percent at 19,075.26 (cloe)
Shanghai – Composite: DOWN 0.1 percent at 3,167.75 (close)
New York – Dow: UP 0.5 percent at 35,225.18 (close)
Euro/dollar: UP at $1.1122 from $1.1113 on Thursday
Pound/dollar: DOWN at $1.2850 from $1.2867
Euro/pound: UP at 86.54 pence from 86.50 pence
Dollar/yen: UP at 141.81 yen from 140.05 yen
Brent North Sea crude: UP 1.0 percent at $80.49 per barrel
West Texas Intermediate: UP 1.1 percent at $76.49 per barrel
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