US, world stocks toast earnings, US rate outlook

LONDON: US stocks were pointing to a higher open on Wall Street and global equities were aiming for their first weekly gain in eight on Friday May 27 on a more optimistic view of earnings and after this week’s Federal Reserve minutes eased fears mega-high interest rates.

Upbeat U.S. earnings prospects for department store operator Macy’s and discount chains Dollar General Corp and Dollar Tree boosted U.S. stocks on Thursday.

The Fed’s May meeting minutes released Wednesday confirmed two more hikes of 50 basis points each in June and July, but policymakers also hinted at the possibility of a pause later in the year.

“It’s all taken from the FOMC (Federal Open Market Committee) minutes,” said Giles Coghlan, chief currency analyst at HYCM.

“Investors were relieved that there was no 75 basis point index.”

Markets would focus on April’s core PCE price index for the United States – the Fed’s preferred inflation gauge – due later Friday for further signs that inflation is on the rise, added Coghlan.

S&P futures rose 0.33% 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.

The MSCI Global Equity Index rose 0.41%. It was heading for a 3.2% rise on the week and a recovery of almost 6% from the 18-month lows set two weeks ago.

Global equity funds saw inflows in the week to May 25 for the first week in seven, according to Refinitiv Lipper.

European stocks hit a three-week high and rose 0.86%. Britain’s FTSE also hit a three-week high and was heading for its best weekly performance since mid-March.

Hong Kong shares rose 2.9% after better-than-expected first-quarter revenue growth from Alibaba and Baidu.

Asian equities also benefited from hopes of stabilizing US-China relations and more stimulus from the Chinese government.

The United States would not prevent China from developing its economy, but wanted it to adhere to international rules, Secretary of State Antony Blinken said Thursday in remarks that some investors interpreted as positive for bilateral relations.

Japan’s Nikkei rose 0.7%, mainland China’s blue chips rose 0.2% and Australia’s resource-rich index climbed 1.1%.

The swing in sentiment drove the dollar to a one-month low against a currency index before reversing some losses to sit 0.17% higher.

The dollar is down 3.4% from 20-year highs hit earlier this month. The euro hit a one-month high before falling 0.24%.

Oil prices hit near two-month highs ahead of a tight market due to higher US gas consumption in the summer, as well as the possibility of an oil ban. EU on Russian oil.

But they fell on Friday, with U.S. crude down 0.29% to US$113.74 a barrel. Brent fell 0.04% to US$117.35 a barrel.

The yield on the benchmark 10-year Treasury fell three basis points to 2.7289%. It had hit a three-year high of 3.2030% earlier this month on fears that rapid Fed hikes could undermine long-term growth.

The two-year yield, which rises on traders’ expectations of a hike in the fed funds rate, fell 2 basis points to 2.4618%.

“Overall, a pronounced stress decompression,” ING analysts said in a note.

German 10-year bond yields fell 4 basis points to 0.955%.

Spot gold rose 0.46% to US$1,858.4 an ounce.

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