Markets focus on US data, including the core PCE price index
Wall Street stocks rallied on Thursday due to upbeat results from retailers following Wednesday’s winning session, suggesting that the economy remains steady despite high inflation. Also, investors cheered the news that JetBlue Airways lifted its revenue forecast. As such, buyers remained in control in a still deeply oversold market. The Dow Jones Industrial Average gained 1.6$, the broad-based S&P 500 added 2%, while the tech-heavy Nasdaq Composite Index advanced 2.7%.
Following suit, Asian stocks advanced on Friday. Japan’s Nikkei 225 rose 0.66% after the data showed that the Tokyo core CPI grew 1.9% year-on-year in May. The Bank of Japan’s governor Kuroda noted that Japan’s core inflation will likely remain around 2% for about 12 months. In Australia, the S&P/ASX 200 rose 1.08%, China’s Shanghai Composite was up just 0.23% and South Korea’s Kospi added nearly 1%.
European equities opened just slightly higher as investors are getting more cautious ahead of fresh US data, including the core PCE price index, personal income and spending, and the University of Michigan consumer sentiment. In the Eurozone, M3 money supply came in at +6.0% in April versus +6.3% y/y expected. Equity markets in Europe are now on course to post a positive week, but the overall tone in the region remains fragile as ECB President Lagarde points to a tightening of monetary policy in July.
In currencies, the USD index remains on the defensive on Friday, holding below the 102.00 figure during the European trading hours. The greenback lacks demand amid risk-on sentiment that has been dominating global financial markets these days. As such, EURUSD extended gains to fresh one-month highs around 1.0765 before retreating marginally in recent trading. While the pair is now well above the 20-DMA, the upside potential remains limited as the safe-haven dollar could find a bottom soon.
