A person walks past an electronic stock exchange board showing Japan’s Nikkei 225 index at a securities firm in Tokyo on Friday, August 4, 2023. Asian stock markets were mixed on Friday after Wall Street fell for a third day following a UK interest rate hike. (` Photo/Shuji Kajiyama)
BEIJING (`) – Global stock markets rose on Friday ahead of a US jobs update that could affect interest rate plans after Britain’s central bank hiked interest rates.
London, Shanghai, Paris and Tokyo advanced. Oil prices rose.
Wall Street futures rallied. US stocks fell for the third day on Thursday after the Bank of England raised interest rates to a 15-year high and indicated they could stay high for a while longer.
Investors were rattled on Wednesday when Fitch Ratings downgraded US Treasury credit ratings, although analysts said it made little difference.
Investors awaited an update from the US government on the stronger-than-expected job market, which Federal Reserve Chair Jerome Powell has cited as a factor in deciding whether further rate hikes are needed to cool inflation.
Jobs data has “the potential to tip the scales for another rate hike in September,” ING’s Francesco Pesole said in a report.
In early trade, the FTSE 100 in London was up 0.4% to 7,556.55. The CAC 40 in Paris was up 0.4% to 7,288.29 and the DAX in Frankfurt was 0.2% higher at 15,920.97.
On Wall Street, futures for the benchmark S&P 500 index rose 0.4%. The Dow Jones Industrial Average rose 0.2%.
On Thursday, the S&P and Dow each lost 0.2%. The Nasdaq Composite fell 0.1%.
In Asia, the Shanghai Composite Index rose 0.2% to 3,288.08 after the People’s Bank of China governor said property developers could raise more money by selling bonds. This will ease the debt controls introduced in 2020 that have sent the industry into a tailspin.
Hong Kong’s Hang Seng rose 0.6% to 19,539.46 and Tokyo’s Nikkei 225 rose 0.1% to 32,192.75.
The Kospi in Seoul was down 0.1% to 2,602.80, while the S&P ASX 200 in Sydney was up 0.2% to 7,325.30.
India’s Sensex rose 0.4% to 65,534.10. New Zealand and Bangkok rose while Singapore and Jakarta fell.
Investors are watching whether the US economy can avoid a recession after repeated hikes in interest rates last year to cool inflation.
Strong hiring momentum has prompted traders to postpone the timeline of a possible recession and raised hopes it may be less severe. However, the Fed may find that strong hiring is adding to the upward pressure on inflation and may raise interest rates again.
Critics say a consensus formed too quickly on Wall Street that inflation was slowing, allowing the Fed to start cutting rates early next year.
The Bank of England warned on Thursday it was too early to declare an end to interest rate hikes as inflationary risks, including higher wages, had “crystallized”. The bank said inflation is expected to fall to 4.9% by the end of the year, but that is more than double its 2% target.
“I don’t think it’s time to say it’s all over,” Bank of England Governor Andrew Bailey said.
Treasury yields in the bond market rose Thursday, pulling money out of stocks.
The yield on the 10-year government bond, which is the difference between the market price for the day and the payout at maturity, rose to 4.18% from 4.09% late Wednesday. It’s up from 2.75% a year ago.
Qualcomm, a maker of processor chips for smartphones and other devices, fell 8.2%, posting one of the biggest losses in the S&P 500. The company reported weaker-than-expected sales for the spring, although its earnings beat forecasts.
On the positive side was cleaning products maker Clorox, which rose 9%. It reported higher earnings and sales than analysts had expected.
Exxon Mobil gained 1.7%. They benefited from the rise in crude oil prices after Saudi Arabia said it would maintain production cuts to boost oil prices.
Two hugely influential companies announced their results after the close.
Apple and Amazon are two of the largest companies on Wall Street by market value, giving their stock movements more weight in the S&P 500 and other indices.
Both are up more than 45% this year on expectations of continued growth. That means they’re pressured to deliver big results to justify the big stock gains.
In energy markets, benchmark U.S. crude rose 29 cents to $81.84 a barrel in electronic trading on the New York Mercantile Exchange. The contract was up $2.06 on Thursday to $81.55. Brent crude, the price basis for international oils, rose 27 cents to $85.41 a barrel in London. In the previous session, the price rose $1.94 to $85.14.
The dollar fell to 142.66 yen from 142.71 yen on Thursday. The euro remained stable at $1.0942.
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