LONDON (Reuters) – World stocks were very close to posting their first weekly loss since May on Friday and the dollar fell for the third day in a row, as even a stronger-than-expected US inflation footprint failed to shake off the bets in the Federal Reserve interest rate cuts.
FILE PHOTO: people walk through the lobby of the London Stock Exchange in London, Great Britain, August 25, 2015. REUTERS / Suzanne Plunkett / Stock Photo
European stocks rose in early trade after a series of modest declines this week and, as investors also digested a weekend storm of Chinese data from Asia.
China's yuan exports increased by 6.1% in the first half of this year compared to the previous year, while imports increased by 1.4%. On top of that, its trade surplus with the United States, one of the main sources of friction with its largest trading partner, increased to $ 29.92 billion in June from $ 26.9 billion in May.
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The data come from a series of disappointing economic reports from around the world, which showed that the world economy suffered a protracted trade war between the United States and China that forced major central banks to adopt a more accommodative stance.
China should also post second-quarter GDP figures on Monday, which are expected to show that the world's second largest economy is slowing at its weakest pace in at least 27 years.
The industrial production figures for the euro zone are due to 0900 GMT, and could be an important trigger for the European Central Bank to continue moving down a path of flexibility, with economists divided on whether the numbers will reveal significant signs of recovery.
"Industrial production in the euro area is expected to expand by 0.9% month-on-month in May according to the national launches we have so far," RBC analysts said in a note.
This would mark the best monthly expansion in industrial production in the euro area since January, they added, although it will continue to represent a significant contraction as of May 2018.
There was a great divergence in the estimates obtained by Reuters, where the most optimistic observe a monthly increase of 0.9% and the most pessimistic observe a fall of 0.5%, the same result as in April.
The meeting of policy makers of the European Central Bank last month agreed on the need to be prepared to provide more stimuli to the economy of the euro zone in an environment of "greater uncertainty", according to the official minutes of the meeting on Thursday.
In Asia, the broader MSCI index of Asia and the Pacific shares outside Japan was down 0.1%.
Against a basket of currencies, the dollar .DXY was lower for the third consecutive day, a decrease of 0.1%. A stronger reading than expected did not shake the convictions that the Federal Reserve will start lowering interest rates at a policy meeting later this month.
The US consumer price index, excluding food and energy, rose 0.3% in June, the largest increase since January 2018, according to data on Thursday.
The reading boosted US Treasury yields, but money markets still indicated a rate cut at the end of July and a 64 basis point cut in cuts by the end of 2019.
Comments from Chicago Fed President Charles Evans, scheduled for later on Friday, and New York Fed President John Williams will provide an opportunity to assess how moderate the central bank is, said Masafumi Yamamoto, strategist Currency manager of Mizuho Securities.
"If these Fed officials are not as polite as Powell, and if the New York Fed manufacturing survey on Monday is stronger than expected, they could show that the weakening of the dollar in response to testimony from Powell's Congress It was exaggerated. "
Elsewhere, the euro EUR = EBS received a boost from a sell-off in the German bond market, which rose 0.1% to $ 1.1270.
German government safe-haven bonds were set for their biggest weekly sale in nearly a year and a half, as signs of economic strength in the United States and parts of Europe suggested that fears of a slowdown may be exaggerated.
Oil prices remained close to six-week highs and were heading towards a weekly gain, as US oil producers in the Gulf of Mexico cut more than half of their production due to a tropical storm and Tensions continued to simmer in the Middle East.
The Brent crude LCOc1 global benchmark index gained 0.77% to $ 67.03 per barrel. US crude West Texas Intermediate (WTI) CLc1 rose 0.68% to $ 60.57 per barrel.
Gold prices, tempered by US consumer inflation data stronger than expected, regained their brightness thanks to renewed commercial concerns and expectations of rate cuts. Spot gold XAU = was last traded at 0.5% to $ 1,410.99 per ounce.
Report by Ritvik Carvalho; Additional reports by Abhinav Ramnarayan and Saikat Chatterjee in London; Edition by Raissa Kasolowsky