Stocks envision third week of gains after tech boost and dollar decline
- FAANG actions in focus before results
- Evergrande avoids default with surprise interest payments
- Crude rebounds, dollar fall, gold rise
LONDON, Oct. 22 (Reuters) – Global equities received a technological boost to contribute to a third straight week of gains on Friday, despite growing concerns about inflation, as the dollar fell and the Oil prices have rebounded above their lows.
MSCI’s largest global equity indicator (.MIWD00000PUS) was up 0.1%, 1.4% higher on the week and just 0.8% from its all-time high. Major European markets were all up, the largest being the UK FTSE 100 (.FTSE), up 0.4%.
This follows gains in Asia, where the Japanese Nikkei (.N225) was up 0.3%, led by the tech sector, and equity bulls were also comforted by news that the real estate company heavily indebted Chinese China Evergrande Group had made a surprise interest payment, thus avoiding a default. for the moment. Read more
The tone of risk has come despite growing investor concern that persistent inflation could force central bankers to tighten monetary policy at a time when global economic growth remains fragile.
Data on Friday showed Eurozone inflation expectations are at their highest level in years, amid a string of warnings from companies such as Nestlé (NESN.S), ABB (ABBN .S) and Unilever (ULVR.L). Read more
Germany’s 10-year breakeven inflation rate, which represents the difference in yield between a nominal bond and its inflation-linked counterpart, reached around 1.81%, the highest since April 2013.
Rising prices held back eurozone growth in October and could set the stage for a difficult European Central Bank meeting next week, said Neil Birrell, chief investment officer of asset manager Premier Miton. Read more
“The ECB is meeting next week, it has a lot to talk about, a faltering economy and rising inflation; it is under pressure to tackle spike in inflation but needs to be cautious about any policy changes. “
Despite fears that inflationary pressures could cause governments to tighten monetary policy too quickly, Mark Haefele, chief investment officer, UBS Global Wealth Management, told clients in a note that stocks could rise further.
“With the current problems always appearing to be more temporary than structural, we believe the stock markets will continue to advance,” Haefele said.
“Indeed, small increases in inflation expectations can be positive for markets if they help allay deflation fears. In addition, according to our assessment, global growth remains strong, supply chain challenges are expected. subside until 2022 and corporate profits are expected to continue to grow. “
US equity futures are pointing to a flat open on Wall Street, after the cash index hit an overnight closing record, led by the surge in tech stocks.
Next week, Facebook, Apple, Amazon and Alphabet, owner of Google, all report, with the bulls hoping to follow this week’s above-forecast earnings from Netflix (NFLX.O). Read more
Meanwhile, benchmark 10-year Treasury yields were at 1.6908%, retreating from a five-month high of 1.7050% reached overnight.
The dollar index, which values the greenback against six major rivals, fell 0.1% to 93.634, although it initially rebounded from recent lows after U.S. jobless claims fell. fell to a 19-month low, indicating a tighter labor market. Read more
The US Federal Reserve has signaled that it could start cutting stimulus as early as next month, with rate hikes to follow at the end of next year. Full employment is among the requirements set out by the Fed for rates to take off.
Fed Chairman Jerome Powell will speak later Friday at a panel discussion.
Among commodities, oil prices rebounded from overnight lows, up 0.3%, with Brent and West Texas Intermediate crude roughly in the dark for the week and threatening to drop earlier. break a winning streak of several weeks.
Gold was up 0.4% on the weaker dollar, on track for its second week of gains.
Additional reporting by Kevin Buckland in Tokyo; edited by Simon Cameron-Moore and Hugh Lawson
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