US stocks flirt with fresh records, rebounding yen hits Nikkei
Global stock markets mostly powered ahead on Friday, lifting the Dow above 40,000 and near a fresh record despite disappointing US inflation data and a lackluster market reaction to American bank earnings.
All three major US indices climbed after both Paris and Frankfurt packed on more than one percent.
Tokyo bucked the trend as the yen shot higher on possible central bank intervention.
One day after slides by the S&P 500 and Nasdaq ended a run of records, New York indices were back on the front foot.
US wholesale inflation rose 0.2 percent in June, more than expected, according to Labor Department data.
However Friday's data was not bad enough to overshadow Thursday's benign consumer price index report that boosted expectations for Federal Reserve interest rate cuts, analysts said.
"Yesterday's decline appears to be a one-off and it's not leading to more selling," said Adam Sarhan of 50 Park Investments, who considers the current dynamics a bull market.
The hardest-hit large bank after earnings was Wells Fargo, which sank 6.0 percent as it reported lower profits due in part to a decline in net interest income.
Both Citigroup and JPMorgan Chase also fell more than one percent.
Earlier this week US Federal Reserve Chairman Jerome Powell indicated that the central bank did not need to wait for inflation to fall to its two percent target to begin lowering interest rates.
"Despite US producer prices coming in hotter-than-expected, most European and US stock indices ended the week on a positive note as investors are convinced a September Fed rate cut is on the cards," said Axel Rudolph, senior market analyst at online trading platform IG.
In Asia, Tokyo tanked 2.5 percent with focus firmly on central bank activity.
Speculation abounds that the Bank of Japan intervened in foreign exchange markets to boost the yen, which sent stocks lower as it drags on the country's manufacturing exports.
Analysts said the softer US inflation data on Thursday provided Japanese authorities the perfect opportunity to step into forex markets to provide support to the yen, which surged against the dollar.
"The pronounced move in the yen appears to be coming on the back of combined impact from US inflation and intervention by Japanese authorities," Charu Chanana at Saxo Markets told AFP.
"There seems to be a new playbook for Japanese interventions, coming in along with supportive fundamentals, making the strength in yen somewhat more durable."
While speculation swirled about official involvement, Japan's top currency diplomat Masato Kanda told reporters late Thursday that authorities were "not in a position to comment on whether they intervened in the market," according to public broadcaster NHK.
- Key figures around 2050 GMT -
New York - Dow: UP 0.6 percent at 40,000.90 (close)
New York - S&P 500: UP 0.6 percent at 5,615.35 (close)
New York - Nasdaq Composite: UP 0.6 percent at 18,398.45 (close)
London - FTSE 100: UP 0.4 percent at 8,252.91 (close)
Paris - CAC 40: UP 1.3 percent at 7,724.32 (close)
Frankfurt - DAX: UP 1.2 percent at 18,748.18 (close)
EURO STOXX 50: UP 1.3 percent at 5,043.02 (close)
Tokyo - Nikkei 225: DOWN 2.5 percent at 41,190.68 (close)
Hong Kong - Hang Seng Index: UP 2.6 percent at 18,293.38 (close)
Shanghai - Composite: FLAT at 2,971.30 (close)
Dollar/yen: DOWN at 157.88 yen from 158.84 yen on Thursday
Euro/dollar: UP at $1.0906 from $1.0868
Pound/dollar: UP at $1.2989 from $1.2915
Euro/pound: DOWN at 83.97 pence from 84.15 pence
Brent North Sea Crude: DOWN 0.4 percent at $85.03 per barrel
West Texas Intermediate: DOWN 0.5 percent at $82.21 per barrel
burs-jmb/acb
C.P.Wilson--RTC
