By Chibuike Oguh and Naomi Rovnick
NEW YORK/LONDON (Reuters) -Global shares rose higher in choppy trading on Friday, marking their fourth straight month of gains despite a period of heavy selling in early August, buoyed by U.S. economic data that lifted the dollar for a week. have caused a long decline – long losing streak.
The U.S. personal consumption expenditures (PCE) price index – the Federal Reserve’s preferred inflation measure – rose 0.2% in July, according to Commerce Department data released Friday.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.5% last month, the report showed. These data provide the basis for a possible easing of monetary policy by the Fed from September onwards.
It ended up 0.55% at 41,563.08, hitting its second consecutive record high. The benchmark rose 1.01% to 5,648.40 and the benchmark rose 1.13% to 17,713.62. For the entire month, the Dow Jones rose 1.8%, the S&P 500 rose 2.3% and the Nasdaq rose 0.6%. The European Stoxx index closed 0.09% higher after hitting an intraday record high, while the 100 fell 0.04%. MSCI’s world stock index rose 0.77%, for a monthly gain of 2.40%.
The stunning recovery from an early August sell-off, reminiscent of the “Black Monday” of October 1987, came as traders projected a so-called Goldilocks scenario in which the U.S. economy continues to grow, but not to the extent that interest rate cuts are avoided.
Money markets are confidently pricing the Fed’s first 25 bp cut of the cycle at its September meeting, with a 33% chance of a massive 50 bp cut.
The US economy grew faster than initially thought in the second quarter of this year thanks to strong consumer spending and corporate profits, a report showed on Thursday.
“The last few days we started off a little stronger, but as the day progressed we drifted and in many cases closed at break-even, slightly positive or slightly negative,” said Tom Plumb, CEO and portfolio manager at Plumb Funds.
“I think this is a sign of a cycle where you’re starting to see people transitioning to a different environment, and that’s not positive for the leaders of the past,” he added, referring to the so-called “Magnificent 7” technology stocks that were at the top. at the forefront of this year’s stock market rally.
Government bonds rallied in early August after a weaker-than-expected US jobs report and a surprise rate hike by the Bank of Japan caused chaos in currency transactions and led to heavy selling of risk assets.
The yield on U.S. 10-year benchmark bonds, which move inversely to prices, rose 4.2 basis points to 3.909% on Friday. The yield, which usually keeps pace with interest rate expectations, rose by 2.4 basis points to 3.9165%.
“As we start to lay out what our expectations are for a lower interest rate environment, at least lower short-term rates, we are already starting to see a change in the shape of the yield curve, which is impacting the bond market, but also the stock market ” Plumb added.
EURO FLAT
The dollar remained near one-week highs against a basket of other major currencies, on track to break a five-week losing streak, although it is still heading for a monthly loss of about 2.5%.
Against the yen, the dollar stood at 146.14, expected to lose more than 2.5% this month, as pressure on the Japanese currency eased on the prospect of narrowing interest rate differentials.
Core inflation in the Japanese capital Tokyo accelerated for a fourth straight month in August, data showed on Friday, with the 2.4% price rise a sign of further rate hikes by the BoJ.
The euro fell 0.2% to $1.105, after falling on Thursday as softer-than-expected German inflation data raised expectations of further interest rate cuts from the European Central Bank.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.48% to end the month 2% higher. Following the collapse in early August, yields fell 1.16% this month after rising 0.74% on Friday.
Oil prices fell. futures for October delivery, expiring Friday, settled at 1.43% at $78.80 a barrel, down 0.3% for the week and 2.4% for the month.
U.S. West Texas Intermediate crude futures fell 3.11% to $73.55, down 1.7% on the week and down 3.6% in August.
The gold price weakened, but there was a monthly gain of 2.8%. lost 0.74% to $2,502.44 an ounce. The US settled 1.3% lower at $2,527.6 [GOL/]
