Global stocks buffeted by tariff threats and data

Stock markets diverged and the dollar dipped Friday as traders tracked US President Donald Trump's latest tariff announcement, economic data and earnings.

Wall Street's main indices opened flat, but the S&P was still able to move into record closing territory and was just a few points shy of its all-time high.

That came despite data showing that US retail sales fell by a more-than-expected 0.9 percent in January from December.

Analysts pointed out that was due in part to the December figure being revised higher.

Briefing.com analyst Patrick O'Hare said the data "points to a tired consumer after the holidays, raising the question as to whether that fatigue will persist because of inflation pressures or prove to be short-lived."

Investors largely shrugged data earlier this week showing an increase in consumer price inflation and higher-than-expected wholesale price inflation.

City Index and FOREX.com analyst Fawad Razaqzada said market attention was firmly on the wholesale price components that feed into the Core PCE index — the Federal Reserve's preferred inflation gauge.

"Weakness in key...components, including healthcare and insurance costs, along with a sharp drop in airline fares, suggest that Core PCE is likely to ease," he said.

Investors are very concerned whether the US Federal Reserve will continue to lower rates this year, having cut three times in 2024, with traders now pricing in just one.

A rebound in inflation, or persistent inflation at a high level would make it difficult for the Fed to cut rates further.

Markets also continued to follow the latest trade developments.

The European Union on Friday vowed to respond "firmly and immediately" to trade barriers after Trump unveiled tariffs that could hit allies and competitors.

Trump on Thursday said he had decided to impose reciprocal duties, in a dramatic escalation of an international trade war he has unleashed since taking office in January, but the measures won't go into effect until a study is completed.

Despite rising trade tensions, investor sentiment has largely held up on hopes that many of the tariffs can be rowed back with negotiations, while Trump's announcement of plans to hold Ukraine peace talks with Russian counterpart Vladimir Putin has added some optimism.

"Tariff ambiguity still reigns, but markets are currently drawing some comfort from the news" of the delay, said National Australia Bank's head of currencies research and markets, Ray Attrill.

Hong Kong led the way among major stock markets Friday, closing up more than three percent, as tech firms extended their recent surge on a Bloomberg report that China had invited Alibaba co-founder Jack Ma and other top entrepreneurs to meet Beijing's top brass that fueled hopes of fresh support for the private sector.

Alibaba piled on 6.3 percent, while JD.com and Tencent each rose more than seven percent.

Key figures around 1430 GMT

New York - Dow: DOWN less than 0.1 percent at 44,693.16 points

New York - S&P 500: UP less than 0.1 percent at 6,120.36

New York - NASDAQ Composite: UP 0.1 percent at 19,967.94

London - FTSE 100: DOWN 0.4 percent at 8,731.15

Paris - CAC 40: UP 0.4 percent at 8,197.08

Frankfurt - DAX: DOWN 0.3 percent at 22,546.69

Tokyo - Nikkei 225: DOWN 0.8 percent at 39,149.43 (close)

Hong Kong - Hang Seng Index: UP 3.7 percent at 22,620.33 (close)

Shanghai - Composite: UP 0.4 percent at 3,346.72 (close)

Euro/dollar: UP at $1.0500 from $1.0467 on Thursday

Pound/dollar: UP at $1.2619 from $1.2586

Dollar/yen: DOWN at 152.13 from 152.76 yen

Euro/pound: DOWN at 83.21 pence from 83.28 pence

Brent North Sea Crude: UP 0.6 percent at $75.46 per barrel

West Texas Intermediate: UP 0.4 percent at $71.56 per barrel