US and Global Stocks Roast Earnings, US Interest Rate Expectations By Reuters

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© Reuters. A man wearing a protective face mask, amid the coronavirus (COVID-19) pandemic, passes a screen showing the Shanghai Composite Index, the Nikkei Index and the Dow Jones Industrial Average outside a brokerage in Tokyo, Japan, February 14, 2022. REUTERS/KIM

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Written by Caroline Cohen

LONDON (Reuters) – US stocks were pointing to a higher open on Wall Street and global stocks looked to post their first weekly gain in eight trading on Friday, amid a more upbeat outlook on earnings, and after the minutes of this week’s Federal Reserve meeting eased fears of a massive rise in interest rates.

Upbeat US earnings outlook from department store operator Macy’s Inc (NYSE:) and discount chains Dollar General Corporation (NYSE:) and Dollar Tree (NASDAQ:) US stocks boosted on Thursday.

The Federal Reserve’s May meeting minutes released on Wednesday confirmed two additional 50 basis points increases in both June and July, but policy makers also suggested the possibility of a pause later in the year.

“It all flows from the FOMC meeting minutes,” said Giles Coghlan, chief currency strategist at HYCM.

“Investors were relieved that there was no 75 basis point tip.”

Coghlan added that markets will focus on the April core PCE price index for the US – the Fed’s preferred inflation gauge – due later on Friday for more clues as to whether inflation is hot.

It rose 0.33% after rising 1.61%, it rose 1.99% and jumped 2.68% on Thursday.

The MSCI global stock index rose 0.41%. It was heading for a 3.2% rise for the week and a recovery of nearly 6% from the 18-month lows I set two weeks ago.

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Global equity funds saw inflows in the week ending May 25 for the first of seven weeks, according to Refinitiv Lipper.

European shares hit a three-week high, up 0.86%. It also hit a three-week high, and was heading for its best weekly show since mid-March. ()

Hong Kong shares rose 2.9% after better-than-expected first-quarter revenue growth from Ali Baba (NYSE: 🙂 and Baidu (NASDAQ :)).

Asian stocks also benefited from hopes of stabilizing Sino-US relations and more Chinese government stimulus.

On Thursday, Secretary of State Anthony Blinken said in comments interpreted by some investors as positive for bilateral relations, that the United States would not prevent China from developing its economy, but wanted it to abide by international rules.

It advanced 0.7%, mainland China’s blue-chip stocks rose 0.2%,Australia’s heavy resources index rose 1.1%.

The swing in sentiment pushed the dollar to a one-month low against the currency index before paring some losses to stand at 0.17% higher.

The dollar has fallen 3.4 percent from a 20-year high hit earlier this month. The euro reached a one-month high before falling 0.24%.

Oil prices are close to two-month highs amid the prospect of market tightening due to rising US gasoline consumption in the summer, as well as the possibility of a European Union ban on Russian oil.

But it fell on Friday, down 0.29 percent to 113.74 dollars a barrel. It fell 0.04% to $117.35 a barrel. [O/R]

The return on the benchmark index fell 3 basis points to 2.7289%. It reached a three-year high of 3.2030% earlier this month on concerns that rapid increases from the Federal Reserve could undermine long-term growth.

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The two-year yield, which rose as traders expected the Fed funds rate to rise, fell 2 basis points to 2.4618%.

“All in all, a clear de-stressing,” analysts at ING said in a note.

German 10-year bond yields fell 4 basis points to 0.955%.

It rose 0.46% to $1,858.4 an ounce. [GOL/]

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