World stocks were heading for their first weekly gain in eight weeks on Friday on a more upbeat earnings view while the dollar hit one-month lows after the Federal Reserve’s minutes suggested it could put the brakes on rapid rate hikes later this year.
Optimistic U.S. earnings outlooks overnight from department store operator Macy’s Inc and discount chains Dollar General Corp and Dollar Tree boosted stocks.
The Fed’s minutes of its May meeting released on Wednesday confirmed two more 50-basis-point hikes each in June and July, but policymakers also suggested the potential for a pause later in the year.
“It’s all flowed through from the Federal Open Market Committee (FOMC) minutes,” said Giles Coghlan, chief currency analyst at HYCM.
“Investors were relieved there wasn’t a 75-basis points hint.”
Markets would focus on the April core PCE price index for the United States due later on Friday for further signs on whether inflation was running hot, Coghlan added.
The MSCI world equities index rose 0.38Markets%. It was heading for a 3.2% rise on the week and an almost 6% recovery from 18-month lows set two weeks ago.
S&P futures were flat after the Dow Jones Industrial Average rose 1.61%, the S&P 500 gained 1.99%, and the Nasdaq Composite jumped 2.68% on Thursday.
European shares hit a 10-day high and were up 0.18% while Britain’s FTSE eased 0.23%, off the previous day’s three-week highs.
Hong Kong shares rose 2.7% after better-than-expected first-quarter revenue growth from Alibaba and Baidu. Asian shares also benefited from hopes of stabilising Sino-U.S. ties and more Chinese government stimulus.
The United States would not block China from growing its economy but wanted it to adhere to international rules, Secretary of State Antony Blinken said on Thursday in remarks that some investors interpreted as positive for bilateral ties.
Japan’s Nikkei advanced 0.7%, China’s mainland blue-chips rose 0.2%, and Australia’s resources-heavy index climbed 1.1%.
The swing in sentiment drove the dollar to one-month lows against an index of currencies, down 3.2% from 20-year highs that hit earlier this month. The euro reached a one-month high and was up 0.11%.
Oil prices stayed near a two-month high, with Brent crude on track for its biggest weekly jump in 1-1/2 months, supported by the prospect of an EU ban on Russian oil and the upcoming U.S. summer driving season.
U.S. crude edged up 0.08% to US$114.20 a barrel. Brent gained 0.28% to US$117.73 per barrel.
The yield on benchmark 10-year Treasury notes dipped to 2.7468%. It had hit a three-year high of 3.2030% earlier this month on fears rapid hikes from the Fed might undermine long-term growth.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, softened to 2.4678% compared with a close of 2.4888%.
“All in all, a pronounced decompression of stress,” said analysts at ING in a note.
German 10-year bond yields eased to 0.982%.
Spot gold rose 0.43% to $1857.79 per ounce.
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