Stock markets end week on lacklustre note

Stock markets headed into the weekend pause Friday on a lacklustre note following a broadly positive week for equities as Federal Reserve chief Janet Yellen indicated a softer approach to raising US interest rates.

The Dow on Wall Street posted a second successive record overnight as investors cheered the more dovish tone from the central bank, which has been moving to tighten monetary policy as the world’s top economy continues to pick up.

The positive lead provided little support however for Asia and Europe, where gains were offset by profit-taking.

Hong Kong, which is at its highest level since mid-2015 following a four-day rally, closed 0.2percent higher.

Second-quarter earnings are also in focus with US banking giants JP MorganChase and Wells Fargo due out later in the day, while Netflix and Johnson & Johnson are among those up next week.

“The US profit reporting season looks likely to be a key market driver over the next couple of weeks,” said CMC Markets analyst Ric Spooner.

“Another good… season will be very supportive for stock markets.”

On foreign exchanges, the dollar struggled in a week where the US currency came under heavy selling pressure in the wake of Yellen’s comments.

Yellen on Wednesday said the US central bank would keep raising the benchmark lending rate gradually as long as the world’s top economy continued to grow as expected, taking into account inflation remained below its two percent target.

However, on Thursday she stressed policy decisions could change as new data come in.

Eyes will be on the release of June consumer inflation later Friday, which has taken on more significance in light of Yellen’s remarks, although forecasts suggest it will remain below the Fed’s two percent target.

Analysts warned the greenback faced pressure over the long term as global central banks begin to wind in their financial crisis-era stimulus and come into line with the Fed.

Most in view is the European Central Bank, which is mulling tightening measures as the long-troubled eurozone stirs back to life.

“At the moment, there is still a large divergence between the eurozone and the US,” according to Milan Cutkovic, market analyst at AxiTrader. 

“However, the economy of the eurozone has picked up a lot in the last 12 months, while economic growth in the States has slowed down.”

He said the single currency — which is at 14-month highs — could test $1.16, adding: “The outlook for the greenback is turning increasingly negative.”

 – Key figures around 1100 GMT – 

London – FTSE 100: DOWN 0.2 percent at 7,397.30 points

Frankfurt – DAX 30: DOWN 0.1 percent at 12,635

Paris – CAC 40: UP 0.1 percent at 5,241.60

EURO STOXX 50: FLAT at 3,164.50

Tokyo – Nikkei 225: UP 0.1 percent at 20,118.86 (close)

Hong Kong – Hang Seng: UP 0.2 percent at 26,389.23 (close)

Shanghai – Composite: UP 0.1 percent at 3,222.42 (close)

New York – DOW: UP 0.1 percent at 21,553.09 (close)

Euro/dollar: UP at $1.1409 from $1.1400 at 2045 GMT Thursday

Pound/dollar: UP at $1.2958 from $1.2942 

Dollar/yen: UP at 113.27 yen from 113.24  

Oil – Brent North Sea: UP 23 cents at $48.65 per barrel

Oil – West Texas Intermediate: UP 22 cents at $46.30 

source: AFP