Global shares firm as US consumer holds up, yen weak ahead of Japan vote
Stronger than expected U.S. retail sales and jobless claims data, suggesting modest improvement in economic activity, helped to push the S&P 500 and the Nasdaq to close at record highs on Thursday.
MSCI's broadest index for global stocks edged up 0.2% on Friday and was on track for a 0.6% weekly gain. (.MIWD00000PUS), opens new tab Asian shares outside Japan were up 0.9% on the day (.MIAPJ0000PUS), opens new tab, while European stocks were broadly flat. Wall Street futures , were also flat ahead of the open.
A solid start to earnings season in the U.S. - with companies including streaming giant Netflix (NFLX.O), opens new tab beating forecasts - is supporting investor confidence, said Eren Osman, managing director of wealth management at Arbuthnot Latham.
"We're pretty constructive on the (U.S.) macro backdrop... We do see some scope for slowing growth, but not for anything material and that's giving the markets quite a nice bounce," Osman said, adding the potential full impact of U.S. tariffs was still in focus.
Alphabet (GOOGL.O), opens new tab and Tesla (TSLA.O), opens new tab are among the companies reporting half-year results next week, which will further test the market mood.
Oil prices also gained on Friday as investors weighed new European Union sanctions against Russia, which include measures aimed at dealing further blows to Russia's oil and energy industries.
U.S. crude rose 1% to $68.19 per barrel and Brent was up 0.8% to $70.06 a barrel.
The yen was broadly flat at 148.5 per dollar but was about 0.7% weaker this week after polls showed Japanese Prime Minister Shigeru Ishiba's coalition was in danger of losing its majority in the upper house election on Sunday.
Data on Friday showed Japan's core inflation slowed in June due to temporary cuts in utility bills but stayed above the central bank's 2% target. The rising cost of living, including the soaring price of rice, is among the reasons for Ishiba's declining popularity.
"If PM Ishiba decides to resign on an election loss, USDJPY could easily break above 149.7 as it would usher in an initial period of political turbulence," said Jayati Bharadwaj, head of FX strategy at TD Securities.
"JPY could reverse the recent dramatic weakness if the ruling coalition wins and is able to make swift progress on a trade deal with Trump."
Elsewhere, the U.S. dollar index slipped 0.2% to 98.285, but was still heading for a second successive weekly gain of about 0.4%, bouncing from a 3-1/2 year low hit over two weeks ago.
Fed Governor Christopher Waller said on Thursday he continues to believe the central bank should cut interest rates at the end of this month, though most officials who have spoken publicly have signalled no desire to move.
U.S. Treasury yields were slightly lower. Benchmark 10-year yields dropped nearly 3 basis points to 4.44%, while two-year yields also edged 3 bps lower to 3.89%.
Spot gold prices gained 0.4% to $3,353 an ounce.
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