Shares opened higher in Europe after a mixed day in Asia on Friday following another encouraging report on US inflation.
The UK said its economy shrank 0.1% last quarter as families cut spending to cope with price increases. The drop was better than most forecasts.
“It’s basically bad but not as bad as people fear and that could be good if it’s been around for a while,” said Oanda’s Craig Erlam in a report. He noted that household spending is likely to weaken further as Britain raises energy prices much higher due to supply disruptions due to the war in Ukraine.
Britain’s FTSE 100 was up 0.6% to 7,507.81 and Germany’s DAX was also up 0.6% to 13,775.16. In Paris, the CAC 40 added 0.5% to 6,574.96.
Futures on the S&P 500 and Dow Jones Industrial Average were both up 0.5%. On Thursday, the S&P 500 lost 0.1%, the Dow gained 0.1% and the Nasdaq gained 0.6%. These three indexes are on a weekly uptrend.
Thursday’s report showed U.S. inflation at the wholesale level was slower than economists expected last month, coming a day after a lower-than-expected reading on inflation. at the consumer level. Such data has raised hopes among investors that decades-high inflation may be nearing a peak and that the Federal Reserve will be less aggressive about raising interest rates than feared.
However, inflation remained staggeringly high and the economy sent the wrong signals before the bailout came in just for investors to pull the carpet from beneath them. Several Fed officials also made comments after Wednesday’s inflation report showed their battle against rising prices was far from over.
In Asian trading, Tokyo’s Nikkei 225 rose 2.6% to 28,546.98. Seoul’s Kospi rose 0.2 percent to 2,527.94 and Hong Kong’s Hang Seng gained 0.4 percent to 20,175.62.
Sydney’s S&P/ASX 200 fell 0.5% to 7,032.50 while the Shanghai Composite index fell 0.2% to 3,276.89.
There was enough hope for a peak in inflation and the aggressiveness of the Fed that led to the S&P 500 having almost halved its losses since the start of the year. It is up more than 14% from its low in mid-June.
Worries about a possible recession still pervade the market, as the Federal Reserve continues to raise interest rates to combat inflation.
A report on Thursday showed that fewer US workers filed for unemployment last week than expected, an encouraging sign of layoffs. But it is still the highest number since November.
Traders are now betting on the Fed raising overnight rates by half a percentage point at its meeting next month, down from the Fed’s last two hikes of 0.75 percentage points. Even if the Fed can manage to slow the economy enough to quell inflation without triggering a recession, higher interest rates will drag prices down for all types of investments regardless.
In another session on Friday, the US crude benchmark reversed early losses, rising 11 cents to $94.45 a barrel in electronic trading on the New York Mercantile Exchange. It rose $2.41 to $94.34 a barrel on Thursday.
Brent crude, the basis for international trading pricing, rose 42 cents to $99.98 a barrel.
The US dollar rose to 133.33 Japanese yen from 133.03 yen. The euro fell from $1.0322 to $1.0294.