Stocks head for best month since 2023 ahead of inflation data

Zawya

a day ago

LONDON - World stocks were heading for their best month since late 2023 on Friday and the dollar was flirting with its first monthly rise of the year, while traders waited for key inflation data and assessed the latest in Washington's to and fro on tariffs.
Markets have been see-sawing all week as investors try to ride out a rollercoaster news flow after a U.S. court blocked most of President Donald Trump's tariffs and a federal appeals court temporarily reinstated them.
An initial fall by European stocks on Friday turned into 0.3%-1% gains despite an unexpected dip in German retail sales and as Wall Street futures beginning to sag again ahead of U.S. PCE inflation data due later.
MSCI's main world index is up over 5% this month while the dollar, which was up 0.3% on Friday, is tantalizingly close to its first positive month of 2025.
It was helped by benchmark 10-year U.S. Treasury yields - which are a proxy for U.S. borrowing costs - rising 0.5 basis points in European trade. They had dipped on Thursday on soft economic data and a solid 7-year bond auction.
Investors have also been rattled by a little-publicized provision in Trump's budget bill that would allow the government to impose taxes of up to 20% on foreign investment.
"A foreign tax provision in the One Big Beautiful Bill Act is alarming," Brown Brothers Harriman strategist Elias Haddad said, adding that all the uncertainty raised the risk of the U.S. entering "a period of stagflation".
Oil prices were on track for a second consecutive weekly drop on expectations of another OPEC+ output hike, although they were up on the day and still up for the month as a whole.
Japan's Nikkei saw profit taking overnight after its near 2% rally the previous day, with investors also concerned about Japanese debt levels and the impact of tariffs.
The yen appreciated as much as 2% from its low on Thursday and was changing hands at roughly 144 per dollar in London. The euro and pound were down 0.3% and 0.1% at $1.13 and $1.34 respectively.
In Asia, Hong Kong's Hang Seng had dropped 1.2%, with Apple suppliers hit by the U.S. tariff reversal. Mainland Chinese blue chips dipped 0.5% too although both scored solid monthly gains. Korean stocks have fared even better, notching up their best month since November 2023 in line with the main world index.
An index tracking emerging market currencies meanwhile has also gained about 2% for the month. That is also its best since November 2023. Soaring gold prices have helped Ghana's cedi rocket nearly 40% this month.
"Trump's trade agenda remains alive and kicking, with the legal battle adding yet another layer of uncertainty," said Rodrigo Catril, senior FX strategist at National Australia Bank.
"The only thing that looks more certain is more uncertainty," he said.
Despite the courtroom drama, the Trump administration said negotiations with top trading partners were continuing unabated.
Treasury Secretary Scott Bessent said during an interview with Fox News that he was scheduled to have talks with a high-level Japanese delegation later on Friday in Washington, although he said talks with China were "a bit stalled".