Global stock markets closed with mixed results on Friday as investors braced themselves for the upcoming interest rate decisions from major central banks worldwide. Wall Street managed to eke out a gain at the end of the trading week following a decline on Thursday, as traders awaited monetary policy decisions from the US Federal Reserve, the European Central Bank, the Bank of England, and the Bank of Japan.
Central banks have been steadily raising rates to combat high inflation. However, some analysts, including former Fed chairman Ben Bernanke, believe that the expected rate rise by the US central bank would be its last in this tightening cycle due to easing price pressures.
The unexpected fall in unemployment claims in the US strengthened the argument of the Fed hawks, suggesting that the US jobs market is not loosening and challenging the expectation that the Fed’s next rate rise will be its last. According to Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, there is no expectation of another rate hike in September, while approximately 20% of analysts predict that there could be another one in November. The rising question is when the Fed will start cutting rates, either in January or March, which will depend on inflation.
Although US stocks were weighed down by a slowdown in technology stocks, with Tesla and Netflix reporting their second-quarter results, the overall performance was mixed. Tesla, the world’s largest electric car maker, saw a 4.2% drop in its stock after announcing a 20% rise in annual net profit and record car deliveries but also warning of production slowdowns in the third quarter due to factory improvements. Similarly, Netflix, the world’s largest streaming service, witnessed an 8.3% drop in its stock after reporting a 3.3% annual increase in net profit that fell short of analysts’ sales expectations.
Looking ahead, Google parent company Alphabet, Microsoft, and Facebook owner Meta Platforms are all set to report their earnings next week. The performance of these tech giants could contribute to the market volatility, as the sector has benefited from the surge in interest in artificial intelligence (AI) and hopes for a softer monetary policy stance.
In terms of market performance, the S&P 500 and Dow Jones Industrial Average inched up by less than 0.1%, with the Dow recording its 10th consecutive weekly increase. The S&P 500 has gained in eight out of the last 10 weeks. However, the tech-heavy Nasdaq Composite slid 0.2% after posting its biggest loss in four months.
In Europe, London’s FTSE 100 settled 0.2% higher, Paris’ CAC 40 added 0.7%, and Frankfurt’s Dax shed 0.2%. Meanwhile, in Asia, Tokyo’s Nikkei 225 closed 0.6% lower, the Shanghai Composite lost 0.1%, and Hong Kong’s Hang Seng index gained 0.8%.
In the commodities market, oil prices recorded a fourth straight weekly gain, supported by falling crude stocks despite demand concerns. Brent added 1.8% to close at $81.07 a barrel, while West Texas Intermediate rose 1.88% to settle at $77.07. On the other hand, gold fell approximately 0.2% to close at $1,966.60 an ounce.
Overall, the mixed performance of global stock markets reflects the cautiousness of investors as they await the interest rate decisions from major central banks. The upcoming week’s events, including the company earnings reports and central bank decisions, are expected to contribute to market volatility and potentially shape future monetary policies. Investors will closely monitor these developments and market indicators to inform their investment strategies in the coming months.
