Stocks mixed as traders weigh inflation, US debt ceiling uncertainty
Stock markets were mixed on Friday as traders weighed a range of issues, including US debt-ceiling hopes, expected central bank calculations and more signs of a slowing economy.
Investors hoping the US Federal Reserve will finally take a breather from its long-running campaign of interest rate hikes have been left feeling a little more confident this week after data showed US inflation on both a consumer and wholesale level continued to ease in April.
Their hopes were given a further boost on Thursday by news that jobless claims last week hit their highest since October 2021, suggesting the labor market was showing some slack.
The Fed has long said it needed to see a softening in employment as well as a drop in inflation before it could consider ending its rate hike drive and look at a potential cut in borrowing costs.
"US economic data... continued the theme of tentative signs of a softening labor market and room for optimism about the inflation outlook," said National Australia Bank's Taylor Nugent.
Major European markets finished up on Friday, capping off a week where global stocks have oscillated. But Wall Street stocks fell into negative territory after climbing at the open.
This followed a warning of a "significant risk" that the United States could default on its debts by June 15 if lawmakers fail to agree on a deal to raise current limits on government spending, according to the Congressional Budget office.
The updated CBO forecast also brings forward from July to June the so-called "X-date" -- when the US will run out of money to pay for existing financial obligations.
This adds pressure on Democrat and Republican leaders to find common ground on raising the US spending cap.
Much-anticipated debt-ceiling talks between President Joe Biden and Republican leaders have been postponed until next week, with sources saying staff-level discussions were progressing.
"It is good to know that talks are happening but in this matter, talk is cheap," said Patrick O'Hare, analyst at Briefing.com.
"It is action to raise the debt ceiling that is required and until that action happens, risk tolerance will be reined in."
In spite of the uncertainty on the debt-ceiling talks, the dollar forged higher against the euro and other major currencies.
"The buck has served as a safe harbor from worries about a weak Chinese economy and volatility on Wall Street," said a note from Convera, adding that the dollar's strength partly reflects statements from other leading central banks that have hinted at a pause on further interest rate increases.
- US-China meeting -
Focus across the Atlantic was also on some positive news out of Washington -- US National Security Advisor Jake Sullivan and top Chinese diplomat Wang Yi met in Vienna this week, as the superpowers seek to temper tensions over a number of issues, particularly Taiwan.
Both sides described the face-to-face as "candid, substantive and constructive."
But they were unable to help Hong Kong's Hang Seng Index maintain early gains, with losses also in Shanghai, Seoul, Singapore, Manila, Bangkok, Jakarta and Taipei.
London's FTSE 100 index rose as official data showed the UK economy had eked out growth over the first quarter, although output contracted in March as the country continues to be hit by sky-high inflation and strikes over pay.
- Key figures around 2030 GMT -
New York - Dow: DOWN less than 0.1 percent at 33,300.62 (close)
New York - S&P 500: DOWN 0.2 percent at 4,124.08 (close)
New York - Nasdaq: DOWN 0.4 percent at 12,284.74 (close)
London - FTSE 100: UP 0.3 percent at 7,754.62 (close)
Frankfurt - DAX: UP 0.5 percent at 15,913.82 (close)
Paris - CAC 40: UP 0.5 percent at 7,414.85 (close)
EURO STOXX 50: UP 0.2 percent at 4,317.88 (close)
Tokyo - Nikkei 225: UP 0.9 percent at 29,388.30 (close)
Hong Kong - Hang Seng Index: DOWN 0.6 percent at 19,627.24 (close)
Shanghai - Composite: DOWN 1.1 percent at 3,272.36 (close)
Euro/dollar: DOWN at $1.0853 from $1.0916 on Thursday
Pound/dollar: DOWN at $1.2451 from $1.2511
Dollar/yen: UP at 135.69 yen from 134.53 yen
Euro/pound: DOWN at 87.14 pence from 87.25 pence
Brent North Sea crude: DOWN 1.1 percent at $74.17 per barrel
West Texas Intermediate: DOWN 1.2 percent at $70.04 per barrel