By Sinéad Carew and Huw Jones
NEW YORK/LONDON (Reuters) – MSCI’s global stock index staged an afternoon recovery on Friday as investors repositioned for the end of the month, while the dollar fell with government bond yields as data showed a modest rise in the U.S. inflation in April.
After being in the red for most of the session, the MSCI All Country World Price Index turned positive ahead of an index rebalance.
As trading ended on Wall Street, the global index rose 0.57% to 785.54 after earlier falling to 776.86.
“When you get an upside reversal, it’s always a good sign if you’re bullish,” said Joe Saluzzi, head of Equity Market Structure Research and co-head of equity trading at Themis Trading. He cited month-end portfolio adjustments for the late-session purchases.
Before the market opened Friday, the Commerce Department said the personal consumer expenditures (PCE) price index, widely seen as the Federal Reserve’s preferred inflation indicator, rose 0.3% last month, in line with expectations and the increase in March, while core PCE rose 0.2%, compared to 0.3% in March.
While some strategists said they were relieved that inflation wasn’t higher than expected, Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, said the data didn’t change much in terms of interest rate expectations.
“The core PCE didn’t really do anything this morning… It was just a status quo-type report, so there’s no indication that the Federal Reserve will stay on the sidelines any longer, or cut rates any sooner.”
In addition, the Chicago Purchasing Managers Index (PMI), which monitors the health of manufacturing in the Chicago region, fell to 35.4 from 37.9 last month, well below economists’ expectations of 41.
This week, the MSCI index posted its second consecutive decline, but a monthly gain.
On Wall Street, shares rose 574.84 points, or 1.51%, to 38,686.32, gaining 42.03 points, or 0.80%, to 5,277.51 and losing 2.06 points, or 0.01%, to 16,735.02.
Earlier, the European index closed 0.3% higher. While the index rose 2.6% this month, it fell 0.5% this week in its second consecutive weekly decline.
Data showed eurozone inflation rose more than expected in May, although analysts said this is unlikely to stop the European Central Bank from cutting borrowing costs next Thursday but strengthens the case for a pause in July could strengthen.
In currencies, the , which measures the dollar against a basket of currencies including the yen and euro, fell 0.15% to 104.61, posting its first monthly decline in 2024 after the data.
The euro rose 0.16% to $1.0849, but against the Japanese yen the dollar strengthened 0.27% to 157.24.
Treasury yields fell following signs of inflation stabilization in April, suggesting to some that the potential for the Fed to cut rates later this year remained intact.
The yield on US 10-year benchmark bonds fell 5.1 basis points to 4.503% from 4.554% late on Thursday, while
the yield on 30-year bonds fell by 3.4 basis points from 4.685% to 4.6511%.
Rates, which typically keep pace with interest rate expectations, fell 5.2 basis points to 4.8768% from 4.929% late Thursday.
On the energy front, oil prices fell as traders focused on Sunday’s OPEC+ meeting, which is expected to determine the fate of the producer group’s production cuts.
fell 1.18% to $76.99 per barrel to settle at $81.62, down 0.29% on the day.
Gold fell 0.68% that day to $2,326.97 per ounce, but was heading for a fourth straight monthly gain.
