On Friday, equity indices jumped on data indicating U.S. inflation rose roughly in line with forecasts and a rise in technology companies. Global shares were mixed and benchmark Treasury rates were constant.
According to a U.S. Commerce Department report, monthly underlying inflation increased last month, mostly due to housing expenses.
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Friday demonstrated. Even while there is still a chance of a rate rise, most economists predict that the Federal Reserve will stop raising interest rates in early 2024 when savings from the Covid-19 epidemic run out.
In an email, Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina, stated that “core inflation continues to lose speed.” “This report will not likely change the Fed’s view that inflation will slow in the coming months as demand slows.”
The S&P 500 increased by 0.35% to 4,151, the Nasdaq Composite climbed 1.16% to 12,741, while the Dow Jones Industrial Average decreased by 0.16% to 32,732.
Amazon.com, a major online retailer, had its shares rise 8% after exceeding sales forecasts, while Intel Corp saw a 9% increase after indicating that the personal computer industry was beginning to recover after a prolonged period of decline.
Following encouraging news on Thursday that the U.S. economy expanded at its quickest rate in almost two years in the third quarter and that the European Central Bank (ECB) kept interest rates unchanged, MSCI’s all-country equities measure increased by 0.45%.
The MSCI’s broadest index of Asia-Pacific equities outside of Japan finished 1.1% higher after reaching a new 11-month low on Thursday. Europe’s Stoxx 600 share index was down 0.9%.
After surpassing 5% earlier in the week, the yield on the 10-year U.S. Treasury, which is inversely correlated with the debt security’s price and serves as a benchmark for borrowing rates worldwide, hardly moved at 4.862%.
Even with the unexpectedly robust U.S. economic growth in the third quarter, Bank of America strategists stated that a slowdown in the fourth quarter still rendered “a soft landing more likely than no landing.”
The letter they released on Friday stated that, “markets continue to hope for disinflation to continue smoothly, but don’t take disinflation for granted,” on a global scale.
The Fed is anticipated to maintain its funds rate between 5.25% and 5.5% the next week, however Chair Jay Powell has stated that more rate increases may be necessary given the robust economy and competitive labour market.
The European Central Bank (ECB) maintained its record-high deposit rate of 4% on Thursday, however President Christine Lagarde hinted that more monetary tightening may be forthcoming in remarks made following the decision.
Investors factored in expectations that a Middle East conflict may escalate and impair oil supply, which led to an increase in oil prices.
The euro stayed flat at 1.059 per dollar on currency markets, having dropped about 14% during the previous three months.
The index that gauges the strength of the dollar relative to other currencies has increased by over 5% in the last three months due to rate hikes and a strong U.S. economy. Although it decreased little on the day, the index was still expected to close the week higher.
Overnight, the yen fell to a fresh one-year low of 150.77 per dollar; it was now trading at 149.61. This placed it in close proximity to the three-decade low of 151.94 it experienced in October of last year, which prompted intervention by Japanese authorities to support the currency.