LONDON: Stock markets advanced and the pound seesawed on Friday as investors tracked fresh growth and inflation data at the end of another turbulent week.
The pound jumped on revised figures showing the UK economy had avoided recession – but it swiftly fell back on expectations of an eventual downturn owing to sky-high inflation, but then moved higher again.
“Sterling has been all over the place this week,” said Fawad Razaqzada, analyst at City Index and Forex.com. “For traders, the pound is a confusing arena to be in right now.”
Britain’s borrowing costs soared and the pound hit a record dollar-low earlier this week days after the government announced a controversial tax-cutting budget.
London stocks ended the day with a small gain.
In the eurozone, consumer prices rocketed a record 10 percent in September on soaring energy prices caused by Russia’s war on Ukraine, separate official data showed.
Nevertheless Paris and Frankfurt stocks ended the day with gains of over one percent.
In the United States, data showed the Federal Reserve’s preferred yardstick for inflation – the personal consumption expenditures price index – was higher than expected.
“The key takeaway from the report is that the inflation the Fed says it can control (i.e. core inflation) did not move in a friendly direction in August,” said Patrick O’Hare, analyst at Briefing.com.
“Therefore, market participants can continue to expect the Fed not to be their friend with monetary policy,” he said.
Fed officials have again reiterated their intention to ramp up rates until they have tamed inflation, even if that means plunging the world’s top economy into recession.
Wall Street stocks opened lower and wobbled in early trades, but moved higher by late morning.
In Asia on Friday, Shanghai dropped as data showed China’s manufacturing and services sectors struggled again in September from Covid lockdowns in parts of the country that have battered the world’s number-two economy.
There was also little reaction to news that Beijing would allow some cities to reduce mortgage rates for first-home purchases as it tries to support the property market.
Market sentiment was being eroded also by rising fears about developments in the Ukraine war, as Russia annexed four occupied regions of its neighbour Friday, with President Vladimir Putin threatening to use nuclear weapons to defend the territories.
Key figures around 1530 GMT
New York - Dow: UP 0.3 percent at 29,318.18 points
EURO STOXX 50: UP 1.2 percent at 3,318.20
London - FTSE 100: UP 0.2 percent at 6,893.81 (close)
Frankfurt - DAX: UP 1.2 percent at 12,114.36 (close)
Paris - CAC 40: UP 1.5 percent at 5,762.34 (close)
Tokyo - Nikkei 225: DOWN 1.8 percent at 25,937.21 (close)
Hong Kong - Hang Seng Index: UP 0.3 percent at 17,222.83 (close)
Shanghai - Composite: DOWN 0.6 percent at 3,024.39 (close)
Pound/dollar: UP at $1.1143 from $1.1116 on Thursday
Euro/dollar: DOWN at $0.9797 from $0.9818
Euro/pound: DOWN at 87.97 pence from 88.28 pence
Dollar/yen: UP at 144.69 yen from 144.42 yen
Brent North Sea crude: DOWN 0.4 percent at $88.15 per barrel
West Texas Intermediate: DOWN 0.6 percent at $80.72 per barrel
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