Stocks swing to gain in choppy trading; US dollar rising

European stocks benefited from their losses on Friday, joining a rebound in global equities as investors looked to the second-quarter earnings season to gauge how companies are weathering the impact of soaring prices. Bonds and the dollar rose.

The Stoxx 600 index gained 0.6%, poised for a weekly advance as investors shrugged off worries about the economic outlook. Nasdaq 100 contracts pared losses to trade down 0.5%, weighed by poor results from Snap Inc., while those for the S&P 500 slipped 0.2%.

Earnings reports from American Express Co. and tech giant Twitter Inc. are expected later.

Global stocks remain on track for their best week in a month, reducing the stock market rout this year to around 18%. Speculation that the worst of the selloff is over is partly behind the move.

But anxiety over the damage caused by inflation and rapidly rising interest rates is proving hard to shake, despite moderating expectations of the Federal Reserve’s aggressiveness.

Underlining recession fears, a dollar gauge rose and Treasuries extended a lead, pushing the 10-year yield to around 2.8%.

Economic data on Friday showed the German economy contracting for the first time this year, with inflation weighing on businesses and households and the war in Ukraine destroying confidence.

Meanwhile, Snap’s disappointing earnings hit social media stocks including Twitter, Facebook parent Meta Platforms Inc. and Google owner Alphabet Inc.

The losses mark the industry’s second selloff triggered by Snap in two months, as its results become a barometer of ad spend as economic fears mount. There are growing signs that tech companies are preparing for a recession with some pullback on hiring, while Meta has lost about half its value this year after disappointing earnings forecasts.

Attention will now turn to the Fed meeting next week, where the central bank is expected to raise interest rates again to tame searing inflation.

Some of the major movements in the markets:

Shares

  • The Stoxx Europe 600 rose 0.6% at 11:06 am London time
  • S&P 500 futures fell 0.2%
  • Nasdaq 100 futures fell 0.5%
  • Dow Jones Industrial Average futures are little changed
  • The MSCI Asia Pacific index rose 0.2%
  • The MSCI Emerging Markets Index was little changed

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%
  • The euro fell 0.7% to settle at US$1.0155
  • The Japanese yen was little changed at 137.43 per dollar
  • The offshore yuan was little changed at 6.7747 per dollar
  • The British pound fell 0.4% to settle at US$1.1946

Obligations

  • The yield on 10-year Treasury bills fell six basis points to 2.82%
  • Germany’s 10-year yield fell 16 basis points to 1.06%
  • The UK 10-year yield fell 10 basis points to 1.95%

Goods

  • Brent fell 0.2% to US$103.62 a barrel
  • Spot gold rose 0.4% to US$1,724.83 an ounce

Comments are closed.