Wall Street Meanders as Europe Retreats
Global stocks ended the week mixed on Friday after several central banks moved to contain inflation. On Wall Street, the Dow closed slightly lower while the Nasdaq finished a touch higher. Earlier in the day, European markets pulled back, with Frankfurt, London and Paris each losing around 1.5 percent. Analysts said investors took the Federal Reserve's midweek rate increase as evidence the central bank remains committed to fighting inflation, even though higher rates typically weigh on equities.[S1]
Angelo Kourkafas of Edward Jones said the Fed's credibility was reassuring, but he noted that yields keep climbing at elevated levels and geopolitical uncertainty remains significant. Jack Ablin of Cresset Capital Management said higher yields give investors a reason to shift more money into bonds, describing bond yields as competitive with stocks. Ablin added that investors appear to understand the Fed's stance and expect another rate increase or two before the tightening cycle ends, looking past the near-term hikes.[S1]
Bank of Japan Hikes but Yen Slides
The Bank of Japan lifted its policy rate to 1.25 percent, a level not seen in roughly thirty years, but the yen still slid versus the dollar as traders worried that additional tightening would come more gradually than anticipated. The quarter-point increase had been widely expected following recent hikes by the European Central Bank and the US Federal Reserve. The vote was split 7-2. Quintex Intel's Stephen Innes noted that the dissenting votes carried weight for a market hunting for signals the BOJ might accelerate its hiking path.[S1]
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Officials face mounting pressure to tighten policy further, since an oil price surge linked to the Middle East conflict, with no quick resolution in sight, is likely to keep driving inflation higher. Crude prices had eased on optimism that Saudi Arabia would quickly restore roughly half of its shipments after they were halted by the closure of its East-West pipeline to the Red Sea, then trimmed those gains. Both benchmark crude contracts stayed above $100 per barrel.[S1]
Nike Falls as Mbappe Signs with On
Turning to individual stocks, Nike shares fell 2.3 percent after French football star Kylian Mbappe joined Swiss sportswear label On, bringing an end to a lengthy tie with the American company that dated back to the beginning of his career.[S1]
