Poor retail sales figures softened the inflation outlook and fueled expectations of an earlier rate cut by the Fed
US stocks finished in positive territory on Thursday, with the S&P 500 closing at a new record high. The broad stock index climbed 0.58% to register the 11th all-time high since the start of the year. The Nasdaq Composite added 0.30%, and the Dow Jones gained 0.91%. Investors cheered fresh US economic data as the report showed that retail sales dropped 0.8% in January versus the expected decline of 0.3%. Poor figures softened the inflation outlook and fueled expectations of an earlier rate cut by the Fed.
Tracking Wall Street rally, Asian equities advanced on Friday, with Japan’s benchmark Nikkei 225 index holding around an all-time high even as the data this week showed that the Japanese economy fell into recession in the fourth quarter. In part, Japanese markets are buoyed by investors shifting out of Chinese markets and increasing bets that the Bank of Japan will further delay its plans to begin raising interest rates. Hong Kong’s Hang Seng index jumped 2.48% and the Kospi in Seoul rose 1.34%. Australia’s S&P/ASX 200 climbed 0.69%.
In Europe, stocks opened higher ahead of the weekend, retaining positive bias for the third session in a row and holding around all-time highs. The Stoxx 600 index was up 0.45% in early deals. On the data front, UK retail sales rose by 3.4% last month to see the biggest monthly rise since April 2021 after a record fall in December. London’s FTSE 100 gained 0.7% after the figures beat forecasts. In anticipation of US producer price data, US stock index futures were mixed-to-lower in early pre-market deals. Germany’s DAX and France’s CAC 40 indexes were up more than 0.5%.
Meanwhile, the US dollar has steadied after a two-day slump. Earlier in the week, the USD index briefly peaked just below the 105.00 figure that capped the ascent and triggered some profit-taking. As a result, the greenback has settled below the 104.50 zone on Friday, trading with a modest bullish bias. On the weekly charts, the dollar looks ready to finish the seventh positive week in a row amid waning Fed rate cut expectations. In the near term, the USD index needs to hold above 104.00 in order to finish the trading week in positive territory.
