Global markets creep ahead on recovery optimism

·3-min read
Strong US data has Asian investors in bullish mood at the end of a positive week

Wall Street stocks shrugged off data showing increased US inflation, finishing modestly higher Friday ahead of a holiday weekend, while European equities gained despite disappointing French economic data.

A key US inflation index climbed 3.6 percent in April compared to the same month in 2020, according to government data, the largest jump since September 2008.

The rise comes as economists debate whether government stimulus and loose Federal Reserve policy will cause the world's largest economy to overheat.

The Fed has pledged to maintain low lending rates and its massive bond-buying program until inflation is holding steady above 2 percent and employment fully recovers.

However, the market took the data in stride, suggesting investors share "an abiding belief that the high inflation prints will be transient, as the Fed has suggested," said Briefing.com analyst Patrick O'Hare.

All three major indices finished with gains for the week. US markets will be closed Monday for the Memorial Day holiday.

"Stocks continue to rise since the US economic growth exceptionalism story does not appear to be going away anytime soon and as inflation still looks like it will be transitory," said Oanda senior analyst Edward Moya, of data which suggest that "the economy will run hot this summer on reopening momentum."

- Eurozone confidence -

Across the Atlantic, European stock markets shook off a weak first-quarter growth reading from France to rise across the board, with Frankfurt and Paris adding around 0.8 percent at the close, and while London was flat for the day it is up nine percent for the year to date.

The French economy's unexpected 0.1-percent contraction in the first quarter was outshone by the European Commission's key eurozone sentiment indicator, which soared to 114.5 in May.

That was "markedly" above its pre-pandemic level, according to the data release, and compared with 110.5 in April.

"The headline surveys in the eurozone continue to signal barnstorming growth midway through Q2 as the economy gradually reopens, and vaccination continues apace," said Pantheon Macroeconomics analyst Claus Vistesen.

Commentators also remained optimistic on the longer-term outlook for France.

"We still expect the gradual reopening of the (French) economy to lead to a strong rebound in activity," IHS Markit analyst Diego Iscaro told AFP.

"Given the timing of the reopening, it is likely that the rebound will be reflected in the third quarter of the year and will be driven by a surge in private consumption."

- Key figures around 2030 GMT -

New York - Dow: UP 0.2 percent at 34,529.45 (close)

New York - S&P 500: UP 0.1 percent at 4,204.11 (close)

New York - Nasdaq: UP 0.1 percent at 13,748.74 (close)

London - FTSE 100: FLAT at 7,022.61 (close)

Paris - CAC 40: UP 0.8 percent at 6,484.11 (close)

Frankfurt - DAX 30: UP 0.7 percent at 15,519.98 (close)

EURO STOXX 50: UP 0.8 percent at 4,070.56 (close)

Tokyo - Nikkei 225: UP 2.1 percent at 29,149.41 (close)

Hong Kong - Hang Seng Index: FLAT at 29,124.41 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,600.78 (close)

Euro/dollar: UP at $1.2197 from $1.2195 at 2100 GMT

Pound/dollar: DOWN at $1.4190 from $1.4207

Euro/pound: UP at 85.91 pence from 85.85 pence

Dollar/yen: UP at 109.84 from 109.81 yen

Brent North Sea crude: UP 0.2 percent at $69.63 per barrel

West Texas Intermediate: DOWN 0.8 percent at $66.32 per barrel

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