Thursday, October 21, 2021

Stocks gain despite global trade tensions

Must read

By Colin Cieszynski , CNN Written by

All around the world stocks were mixed Friday following a week filled with big central bank decisions and strong economic data.

The S&P 500 managed a small weekly gain on the back of strong jobs and inflation data, but the Dow Jones Industrial Average continued to shed steam, with stocks in the 30-stock index trading down 0.6% for the week.

Major stock indexes in Europe also closed with mixed results, with London’s FTSE 100 posting a 0.2% gain and Frankfurt’s DAX declining by 0.6%.

In Asia, Japan’s Nikkei index posted its worst week in eight years with stocks falling 2.5% amid concerns over global trade tensions.

Concerns about trade frictions and a domestic earthquake also dominated the news headlines in China, where stocks ended Friday down 1.7%.

When U.S. markets closed on Thursday the Dow had lost over 1% to the end the day at 25,391, while the S&P 500 slid 1.2% to close at 2,848.

A post-Federal Reserve meeting rebound in stock prices and emerging market stocks helped the FTSE 100 back up from its lowest levels of the week.

In a week dominated by central bank decisions, the Fed didn’t help matters, with a one-of-a-kind announcement that all its policymakers approved a widely expected rate hike.

The Bank of England also raised interest rates by 25 basis points, but said it would be flexible should the next economic downturn be severe.

Asian inflation figures helped the mood across markets.

China’s annual consumer inflation reached an eight-month high of 2.2% in July, while producer price inflation recorded its biggest gain in more than two years.

The dollar index, which measures the dollar against a basket of other major currencies, ended the week down 0.1%.

It’s now settled back below the 93.5 mark it hit Thursday night after it peaked at a two-week high, a decline spurred by market players leaving the dollar because they prefer other currencies.

The dollar had continued to rise ahead of the Fed announcement as traders had started to price in a move higher for interest rates over the course of the rest of the year. The rise came after the U.S. central bank signaled that it would begin to shrink its massive balance sheet in the coming months.

Investors had also built positions ahead of a Greek debt repayment date Friday.

That demand subsided, with the Athens stock exchange posting a 1.2% gain for the week, although it fell back slightly in the final hours of trading Friday.

Meanwhile, inflation remains a big concern for investors. Japanese inflation rose 0.6% in June compared with the same month a year ago, while euro-zone inflation slowed to 1.5% last month.

Still, other data remains robust: U.S. private sector payrolls increased by 201,000 in July, a solid gain, according to the ADP Research Institute.

As for the latest predictions for Federal Reserve policy, most experts surveyed by CNNMoney expect the Fed to raise rates again in September.

More articles

Latest article