Investor optimism has abated after Fed officials suggested that rates may need to stay higher for longer
Wall Street stocks saw a mixed close around their record highs after the Dow Jones briefly derailed the 40,000 level for the first time. The blue-chip average jumped above the psychological level before finishing the day 0.1% lower. The S&P 500 index slipped 0.2% and the Nasdaq Composite fell 0.3%. All three indexes set records during the previous session as inflation cooled, reviving hopes for an earlier rate cut by the Federal Reserve. Despite the weak end to the session, the indexes are on track to end the week with gains. For the week, the S&P 500 is up 1.4%, the Dow gains 0.9%, and the Nasdaq is up 2.2%.
Asian equities were mixed-to-lower on Friday as investor optimism has abated after Federal Reserve officials suggested that interest rates may need to stay higher for longer even as inflation shows signs of easing. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.14% after rallying to a two-year high a day earlier. Japan’s Nikkei 225 fell 0.40%, while South Korean Kospi shed over 1%. In China, the Shanghai Composite added 1% despite mixed economic data. While industrial production grew more than expected in April, retail sales and fixed asset investment missed expectations by a wide margin.
In Europe, stocks opened lower ahead of the weekend, with most sectors in negative territory after snapping a nine-day winning streak on Thursday. The pan-European Stoxx 600 was down 0.4% in early deals. US stock index futures were also lower in early pre-market trading, suggesting risk demand continues to wane at the end of a volatile trading week. Later in the day, investors will remain focused on comments from Fed officials that could affect sentiment in the global financial markets.
Meanwhile, the dollar keeps rebounding on Friday, extending yesterday’s gains after a major sell-off witnessed on Wednesday. The USD index derived support from the 104.00 figure to bounce back above the 104.50 zone. In recent trading, the greenback extended its recovery to the 104.75 region, targeting the 105.00 figure as risk sentiment continues to deteriorate, fueling demand for the safe-haven dollar ahead of another series of comments from Fed policymakers.
