European stocks inched higher on Friday, with U.S. equity futures flat as investors parsed stronger-than-expected inflation Stateside and a European Central Bank meeting a day prior.
Investors will also be keeping an eye on the G7 (Group of Seven) meeting of leaders in Cornwall, England on Friday.
The Stoxx Europe 600 index
up 0.4% for the week so far, rose 0.3%, while the German DAX
was flat , the French CAC 40
rose 0.4%, and the FTSE 100
U.S. stock futures
were largely unchanged, following a positive day on Wall Street, with the S&P 500
logging a record finish as investors brushed aside data showing annual U.S. consumer prices climbed 5% in May to a 13-year high.
Markets have been concerned that signs of rising inflation globally will push central banks to tighten ultra-easy monetary policies and stimulus enacted to fight the pandemic fallout. But the Federal Reserve has maintained that it sees price pressures as transitory and markets continue to believe that, said Jeffrey Halley, senior market analyst at OANDA, in a note to clients.
“The inflation data needed to either fall dramatically or print much higher than last month to move the needle. In the end, it came in at no man’s land levels triggering a reversion to the mean behaviorally for financial markets,” Halley said. The Federal Open Market Committee meets next week, but no change in policy is expected.
Meanwhile, the European Central Bank on Thursday left interest rates unchanged and made no tweaks to the size of its asset-buying programs at its policy meeting.
On the data front, the U.K. economy expanded 2.3% in April, its fastest monthly pace since July 2020, the Office for National Statistics said.
Yields continued to fall on both sides of the Atlantic, with that of the German 10-year bund
down 1 basis point to -0.268%, and the 10-year U.S. Treasury bond yield
down 3 basis points to 1.437%, hovering at a three-year low.
Banks were the weakest sector in Europe, falling in step with bond yields. Shares of Deutsche Bank
slid 3%, those of Société Générale
lost 1.6% and Crédit Agricole
Resource stocks were rising, with metals pricing climbing. Shares of miners Rio Tinto
Shares of Swedish retail chain Hennes & Mauritz
were also climbing, up 1%.