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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

US, world stocks upbeat on Fed view

A woman walks past the closing numbers on the Tokyo Stock Exchange in the business district of Tokyo on Friday, following recent gains on Wall Street. -  AFP
A woman walks past the closing numbers on the Tokyo Stock Exchange in the business district of Tokyo on Friday, following recent gains on Wall Street. - AFP

Oil lost some shine on Friday but has still recouped some of last week's losses as recession fears ease


LONDON: US stock index futures were indicating a positive start to Wall Street on Friday and world stocks headed for a fourth straight week of gains as investors scaled back views on how far US interest rates and inflation can climb.


Oil lost some shine on Friday but has still recouped some of last week's losses as recession fears ease.


A slight easing of inflation readings drove global stocks higher and capped a rising dollar this week, though a string of Fed speakers dampened expectations of the central bank going slow on further policy tightening.


"Inflation seems to have turned and that was positive, the growth stocks are outperforming again," said Matthias Scheiber, global head of portfolio management for multi-asset solutions at Allspring.


"I wouldn't be surprised if we have a good finish into the weekend," he added, though he said investors remained cautious.


S&P futures gained 0.37 per cent after the S&P index closed down 0.07 per cent.


MSCI's world stock index was steady but was eyeing a 1.7-per cent rise on the week.


Investors bought $7.1 billion in equities in the week to Wednesday, with US growth stocks recording their largest weekly inflow since December 2021, BofA said on Friday.


European stocks hit two-month highs before trimming gains to trade down 0.12 per cent. Britain's FTSE climbed 0.28 per cent and was eyeing two-month highs.


Investors are focused on further inflation data later on Friday, with the publication of the University of Michigan's preliminary survey of consumers for August.


Odds of a 75 basis points US hike in September were as high as 68 per cent earlier in the week, but are now around 34 per cent, where they were a week ago.


However, San Francisco Federal Reserve Bank president Mary Daly said on Thursday that while a 50 basis point rate hike next month "makes sense" given economic data, she'd be open to a bigger hike if necessary. The rate is currently in the 2.25-2.5 per cent range.


Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari have this week also pointed to rates well above 3 per cent this year.


"Inflation is elevated, so we do not rule out additional tightening," said Steve Ellis, global CIO fixed income at Fidelity International.


"However, markets expect another 100 basis points of hiking this year and this is, in our opinion, excessive."


US 10-year Treasury yields were trading at 2.869 per cent after hitting a near-three-week high of 2.906 per cent.


Benchmark German 10-year government bond yields briefly rose above 1 per cent for the first time in two weeks.


The dollar gained 0.37 per cent against a basket of currencies while the euro lost 0.28 per cent to $1.0287. Sterling dropped 0.76 per cent against the dollar to $1.2120 after data showing British GDP fell 0.6 per cent in June and 0.1 per cent on the quarter.


MSCI's broadest index of Asia-Pacific shares outside Japan hit six-week highs before steadying, and was heading for a weekly gain near 1 per cent.


Hong Kong's Hang Seng index rose 0.46 per cent, but Chinese blue-chip stocks dipped 0.1 per cent.


Japan's Nikkei was the major outlier, surging 2.62 per cent to its highest level since January as markets reopened following a national holiday.


Brent crude was headed for a weekly climb of more than 3 per cent, recouping part of last week's 14 per cent tumble, as recession fears eased.


However, Brent crude futures fell 1.17 per cent to $98.37 a barrel. US West Texas Intermediate crude dropped 1.58 per cent to $92.76.


Spot gold was down 0.1 per cent at $1,787 an ounce. - Reuters


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