Markets consolidate, buoyed by prospects

Markets consolidate, buoyed by prospects | Daily Tribune

Global markets stalled or trimmed gains after a bullish week buoyed by US data and upbeat company earnings.

New York — whose S&P 500 and Nasdaq Composite struck record highs on Thursday — made little further headway, while the Dow slid.

In Europe, London’s blue-chip FTSE was up though just under its all-time record reached on Tuesday. Paris was flat and Frankfurt slipped a little on profit-taking.

Asian markets closed higher except for Tokyo, which was dragged down ahead of weekend upper-house elections that could spell trouble for Japanese Prime Minister Shigeru Ishiba.

The Philippine Stock Exchange index climbed back to 6,300 level with its total value nearing P7.35-billion net of extraordinary block sales.

The market listed 93 gainers, 104 decliners and 53 companies remained unchanged on Friday as investors remained careful about the potential updates on tariffs as the negotiations will take place early next week.

Worries dissipating

The week’s strong performance in equities showed that worries were largely being set aside for now when it comes to US President Donald Trump’s threats of higher tariffs from 1 August if governments do not agree on trade deals.

“With the president toning down his rhetoric, markets are quick to forget tariff risks and concentrate on the positives including a resilient US economy,” said Kathleen Brooks, research director at trading firm XTB.

The overall optimism was fueled by data suggesting the US economy was still well, with no persuasive indication that the tariffs were causing a surge in inflation.

A June consumer price index report released this week “does not reveal tariff-induced price increases, but a closer look shows clear signs” they could be building, said Holger Schmieding, chief economist at Berenberg bank.

“We expect (US) annual core inflation to approach 3.5 percent by year-end and the Fed to hold the policy rate at the 4.25-4.50 percent target range,” he said, referring to the US central bank.

One Federal Reserve governor, Christopher Waller, on Thursday argued for a July rate cut, saying he expected tariff increases to cause a one-time bump to prices. On Friday, Waller flagged risks in the labor market.

But overall, Fed policymakers have remained cautious as they gauge the right timing for further interest rate reductions.

Trump this week denied he was planning to sack Fed boss Jerome Powell, whom he had been urging to reduce US borrowing costs to boost the world’s top economy.