Investors park inflation concerns to renew bets on stocks

London-Friday stocks rose, supported by good corporate earnings results, but soaring oil prices and stagnant car sales in Europe reminded us of headwinds in the global economy.

The STOXX index of 600 European stocks rose 0.2% at a three-week high. The UK’s FTSE 100 also rose 0.2%, and the UK’s Best Equity Index has recovered all the ground it has lost since the coronavirus pandemic began last March.

“There is an element of complacency,” said Mike Hewson, chief market analyst at CMC Markets.

“But revenues from various businesses this week have eased some of the concerns that businesses can’t pass on some of these cost increases to consumers, which increases risk,” Hughson said. Stated.

Wall Street’s S & P 500 index recorded the highest daily growth rate since early March, as strong earnings from top US banks on Thursday are expected to be the same from Goldman Sachs later on Friday. , European lenders sent higher in early transactions.

Optimistic views on the market will be tested by China’s low-growth data expected next week and the impact of rising oil prices on consumers in the winter, according to Hughson.

Oil storage tank
On April 21, 2020, an aerial photograph of the Cushing Oil Hub in Cushing, Oklahoma shows a crude oil storage tank. (Drone base / Reuters)

European car registrations fell by more than a quarter in September, and Toyota announced in November that it would cut global production as chip shortages and supply chain problems continue to plague the sector.

Investors were also trying to figure out where the bond would go next after the 10-year Treasury yield hit a 10-day low.

“There are no strong cases in either direction, and many investors may be performing disastrously as major fixed income indexes have been in the red since the beginning of the year. Yield volatility will rise over the next few months. We may continue to do so, “UniCredit told the client. With a memo.

Asian stocks rose on Friday based on Wall Street’s positive lead, although concerns over the Chinese economy outweighed profits.

Brent Crude Eyes $ 85

Oil prices have been high for the first time in years, driving growth in North Asia’s energy import markets, but good news for some Southeast Asian energy export markets.

US crude rose 1% to $ 82.13 a barrel, returning to close to Monday’s seven-year high of $ 82.18. Brent crude rose 1% to $ 84.88 a barrel, hitting a three-year high on Monday.

Bitcoin reached a six-month high of $ 60,000 on Friday as traders became more and more confident that U.S. regulators would approve the launch of exchange-traded funds under futures contracts. We are approaching a record hit in April.

The broadest index of MSCI non-Japanese Asia Pacific equities rose 1.1%, set to a 1.7% rise per week. This was the best weekly performance since early September, with Nikkei in Japan jumping 1.81%, driven by tech stocks.

People walking by the electronic stock board of a securities company in Tokyo on October 13, 2021. (Koji Sasahara / AP photo)

Analysts attribute the rise in Asia to a backlash from the United States.

US stocks rose overnight after data showed lower unemployment allowance bills, lower-than-expected factory gate price inflation, and better-than-expected results for the four largest consumer banks in the United States.

“The story of stagflation was spilled with cold water,” said Kyle Roda, an analyst at IG Market.

China’s stocks have risen more cautiously than anywhere else, with top-tier stocks outperforming next week’s growth rate by 0.43 percent.

“Third-quarter GDP growth slowed from 5.6% to 4.6% in the wake of repeated COVID outbreaks, given persistent weakness in consumption and services, and low levels of decline in the year-ago quarter. I expect that, “a Barclays analyst said in a memo.

In the currency market, the dollar has risen again for nearly three years due to the appreciation of the yen, buying 114.12 yen for one dollar, the highest since the second half of 2018.

The dollar index, which measures the greenback against a basket of currencies, was slightly lower that day at 93.89, set to the first weekly decline compared to major peers since the beginning of last month, with Sterling and the euro.

Benchmark 10-year Treasury yields were 1.5458%, slightly higher that day after a downtrend this week from Tuesday’s four-month high of 1.631%.

Hugh Jones