London (AFP) – Global stock markets diverged and oil prices wobbled on Friday, approaching the end of a week dominated by central bank moves to tame inflation driven by the Middle East war. Wall Street opened mixed, while European markets fell and Asian equities were lifted by renewed AI optimism. “There isn’t much conviction in key corners of the capital markets,” said Patrick O’Hare at Briefing.com.
The Bank of Japan raised interest rates to a three-decade high on Friday, but the yen sank against the dollar on fears that the pace of hikes might be slower than expected. That came after the US Federal Reserve lifted borrowing costs, providing relief to traders concerned that policymakers were not moving quickly enough to address a spike in inflation that could deal a blow to the world’s biggest economy. The European Central Bank has also recently tightened monetary policy, while the Bank of England this week held its benchmark interest rate but signalled possible hikes ahead.
Oil prices fell around two percent on hopes that Saudi Arabia was moving to restore about half of crude shipments within days after they were disrupted by the stoppage of its East-West pipeline to the Red Sea, before paring losses. The conduit, even more important since the effective closure of the Strait of Hormuz by Iran, was shut last week after being targeted by Yemen’s Iran-backed Houthis. Crude prices, which soared around a fifth in September, have fallen over the past three days, but international benchmark Brent remains over $100 a barrel.
**Battling inflation**
The surge in oil has been among the main catalysts for rising inflation since the United States and Israel began their war on Iran at the end of February. The latest moves in oil and the Fed’s action kept the 10-year US Treasury bond yield, a key indicator of borrowing costs throughout the world’s biggest economy, around five percent.
Japan’s stock market was also helped by a drop in the yen against the dollar that came in the wake of the Bank of Japan’s well-telegraphed decision to lift rates to their highest level since 1995. The yen slipped to more than 157 to the greenback, compared with around 156 earlier. The fall in the Japanese currency came after “two committee members voted against the hike, which suggests the BoJ will not be able to embark on a fast pace of rate hikes,” said Kathleen Brooks, research director at XTB.
The spread between French and German 10-year bond yields reached one percentage point for the first time since 2012 on Friday, a day after Paris proposed 54 billion euros in spending cuts in the 2027 budget. That would take the public deficit to 5.0 percent of gross domestic product (GDP), which the government acknowledged will in fact rise this year to 5.4 percent despite pledges to reduce it.
**Key figures at around 1330 GMT**
New York – Dow: DOWN less than 0.1 percent at 51,742.16 points
New York – Dow: UP 0.1 percent at 7,647.50
New York – Dow: UP 0.4 percent at 26,535.08
London – FTSE 100: DOWN 1.3 percent at 10,676.14
Paris – CAC 40: DOWN 1.4 percent at 8,073.27
Frankfurt – DAX: DOWN 1.3 percent at 25,378.83
Tokyo – Nikkei 225: UP 1.4 percent at 65,018.95 (close)
Hong Kong – Hang Seng Index: UP 0.6 percent at 24,750.78 (close)
Shanghai – Composite: UP 0.9 percent at 3,911.87 (close)
Dollar/yen: UP at 157.79 yen from 155.96 yen on Thursday
Euro/dollar: DOWN at $1.1467 from $1.1480
Pound/dollar: DOWN at $1.3349 from $1.3358
Euro/pound: DOWN at 85.90 pence from 85.94 pence
West Texas Intermediate: UP 0.3 percent at $97.55 per barrel
Brent North Sea Crude: DOWN 0.4 percent at $104.45 per barrel
© 2024 AFP
