Global stocks hovered near record highs on Friday, on track for a third weekly gain after benign U.S. inflation data eased bets on a Federal Reserve rate hike next month. Oil prices climbed as Middle East peace talks stalled, but volatility gauges kept falling, signaling little investor alarm.
Inflation data cools rate-hike bets
Global stocks hovered around record highs on Friday, set for a third weekly gain after benign U.S. inflation data dented expectations for a U.S. rate hike next month. Faltering talks to end the war in the Middle East, however, sent oil prices higher.
Short-dated bond yields have risen this week, but only modestly, while several market-based measures of inflation expectations have continued to trend lower. Investors are showing no signs of alarm, and gold, which suffers when rates rise, has touched two-month highs. Instead, the focus remains on the broad AI theme after strong earnings helped soothe worries about massive AI spending.
Oil rallies on Middle East impasse
Brent crude futures rose 1.7% to $88.5 a barrel, heading for a 6% weekly gain, as the impasse over a peace deal continued and the United States threatened to ramp up economic pressure on Iran, including extending a naval blockade. European natural gas futures were set for a 10% weekly gain, and U.S. gas futures for a 3.5% rise.
Yet stocks brushed off the energy move. The MSCI All-World index, up for a third straight week, traded just below record highs, while in Europe the STOXX 600 was a touch lower on the day, as losses in the tech sector were broadly offset by gains in capital-intensive shares such as defence and carmakers.
Calm holds despite geopolitical risk
The VIX volatility index was set for a fourth weekly fall, the longest such stretch since May 2025, reflecting diminishing volatility concerns among equity investors, while a measure of bond market volatility headed for a second weekly drop.
In currencies, the yen strengthened, leaving the dollar down 0.2% at 159.18, after a Reuters report that the Bank of Japan could raise rates as soon as September, according to three sources familiar with policymakers' thinking. It remains within sight of the 160 level that traders think could trigger another bout of yen buying from Tokyo, after a joint intervention with the United States last month failed to support the currency.
Source: Investing.com
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