LONDON: Global stock markets were heading towards the weekend on a mostly positive note Friday, as fearful speculation on US rate hikes took a back burner.
Europe’s main stock markets were mildly higher at the close, except for London which was under pressure from a strong pound and some weak corporate results.
Wall Street was firmer approaching midday in New York, after the Federal Reserve downplayed inflationary pressures in the US economy in a monetary policy report to Congress.
Gold slipped back, a good indicator of investors getting back some appetite for risk.
The dollar, which had risen against its key rivals earlier in the session amid expectations that US interest rates will rise faster than previously forecast this year, eased back a little following the Fed report against the yen, but continued firm against the euro.
“The story defining the dollar’s impressive appreciation this week continues to revolve around heightened speculations of higher US interest rates in 2018,” said Lukman Otunuga, an analyst at FXTM.
Shares in Royal Bank of Scotland slumped in London despite the state-rescued bank posting its first profit since 2007, on the eve of the global financial crisis.
“It seems that investors were put off by the lack of clarity surrounding RBS’ settlement with the US Department of Justice” linked to the US subprime mortgage crisis a decade ago, said Connor Campbell, analyst at Spreadex trading group.
British Airways owners IAG also saw their shares nosedive.
– All about nerves –
Earlier on Friday, Asian stock markets ended the week on a positive note following overnight gains on Wall Street, traders said.
While global stock market volatility that greeted the start of February has subsided somewhat, traders continue to fret over the prospect that US borrowing costs are likely to rise further as the world’s top economy powers ahead.
“Investors are just nervous about interest rates,” Paul Nolte, a portfolio manager at Kingsview Asset Management in Chicago, told Bloomberg News.
“Everybody is waiting for more economic data to confirm or deny whatever the Fed position is. It’s a big case of the nerves.”
Equities sank in the middle of the week after the Fed released minutes pointing towards a number of US rate hikes this year owing to an expected surge in inflation as Donald Trump’s tax cuts kick in and economic growth improves.
In commodities trading, oil prices retreated on profit-taking, one day after crude futures rallied on easing concerns about a pick-up in US supplies.
– Key figures around 1640 GMT –
London – FTSE 100: DOWN 0.1 percent at 7,244.41 points (close)
Frankfurt – DAX 30: UP 0.2 percent at 12,483.79 (close)
Paris – CAC 40: UP 0.2 percent at 5,317.37 (close)
EURO STOXX 50: UP 0.3 percent at 3,441.46
New York – DOW: UP 0.7 percent at 25,137.89
Tokyo – Nikkei 225: UP 0.7 percent at 21,892.78 (close)
Hong Kong – Hang Seng: UP 1.0 percent at 31,267.17 (close)
Shanghai – Composite: UP 0.6 percent at 3,289.02 (close)
Euro/dollar: DOWN at $1.2291 from $1.2330 at 2150 GMT
Pound/dollar: UP at $1.3971 from $1.3952
Dollar/yen: DOWN at 106.70 yen from 106.74 yen
Oil – Brent North Sea: UP 68 cents at $67.07 per barrel
Oil – West Texas Intermediate: UP 58 cents at $63.35