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Oil should end the week unchanged
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The dollar faces its biggest weekly gains since February
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Nikkei climbs 0.9% to its highest level in 1 1/2 years
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US stock index futures rise ahead of Wall Street’s open
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US data bolsters confidence that the Fed is on pause and points to the risk of a slowdown
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Banks’ fears linger after PacWest deposits fell
By Huw Jones
LONDON, May 12 (Reuters) – Global stock markets held on to modest gains on Friday, reassured by the prospect of a solid start on Wall Street, although worries over US government finances dampened investor risk appetite.
Oil prices erased earlier losses as signs of a supply deficit offset fuel demand concerns in the US and China.
The dollar edged higher, heading for its biggest weekly gain since February, as investors bet overnight data showing a slowdown in the US economy would prompt the Federal Reserve to pause interest rate hikes.
The MSCI All Country stock index was flat for the week, little changing, but still up about 7% for the year.
Nasdaq futures and S&P 500 futures were higher, with Tesla Inc. up 1.5% in premarket trade as the electric vehicle maker hiked U.S. prices of some models and chief executive Elon Musk said he had a new CEO for Twitter found.
In Europe, the STOXX 600 index edged up 0.4%, trading slightly higher this week as Richemont shares hit a record high on news of strong demand in Asia-Pacific.
The UK economy grew for the first three months of the year – rather than the recession forecast for late 2022 – but the recovery remains fragile.
Analysts said investors are looking for new reasons to push markets out of their ranges as a broadly upbeat earnings season comes to an end and the next major central bank interest rate meetings are just weeks away.
“We’ve had an aggressively sideways market and people are looking for something to guide it,” said Mark Tinker, chief investment officer at Toscafund Asset Management in Hong Kong.
The story goes on
A meeting between US President Joe Biden and senior lawmakers scheduled for Friday has been pushed back to early next week. The IMF warned that a US default would have a “severe impact” on the US economy.
“We have a lot of things to stumble upon over the next six months and that’s why people are not committing to buy,” Tinker said, citing the US debt ceiling standoff, the end of using Libor interest rates in June and the way and way The war in Ukraine is unfolding.
US data on Thursday bolstered confidence that the Federal Reserve will almost certainly suspend rate hikes at its June monetary policy meeting, with futures markets continuing to price in about 78 basis points of rate cuts by year-end.
Next week investors will be checking a range of US data for interest rate clues, including retail sales and industrial production numbers. “The former should benefit from robust auto sales, while the latter will be held back by falling production,” ING Bank said.
CHINA IS LOSSING STEAM
China’s economic recovery appears to be losing momentum as new bank lending contracted in April, consumer prices rose at their slowest pace in more than two years and imports fell unexpectedly, sending commodity prices from copper and iron ore to oil plummeting.
China’s blue chips fell 1.3% and are expected to fall 1.7% this week, while Hong Kong shares fell 0.5% on the day.
In Asia, MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.6% and was heading for a 1.2% weekly decline.
However, Japanese equities fared better, with the Nikkei climbing 0.9% to its highest level since November 2021 as investors cheered announcements of higher shareholder returns during earnings season.
The US dollar benefited from safe-haven inflows amid growth and banking concerns and maintained modest gains against a basket of currencies.
The euro was trading at $1.089, down 0.2% on the day, and the sterling was slightly firmer at $1.2527.
Government bond yields firmed, with benchmark 10-year bond yields at 3.4177%, while 2-year bond yields came in at 3.9140%.
US crude futures edged up 0.4% to $71.17 a barrel, while Brent crude was up 0.3% to $75.24 a barrel.
Gold prices fell 0.6% to $2,004 an ounce.
Bitcoin fell 2.3% to $26,362.
(Reporting by Huw Jones, additional reporting by Stella Qiu, editing by Edwina Gibbs, Mark Potter and Chizu Nomiyama)
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