European shares and US futures edged higher, but global stocks headed for a fifth straight week of losses. Oil steadied above $100 a barrel in its most volatile week in almost two years. Gold nudged at $2,000 an ounce after US consumer inflation came in at 40-year highs. Loading Something is loading.
Global shares edged higher on Friday, but headed for a fifth straight weekly loss, as investors worried that a sharp economic slowdown in the face of Russia’s war in Ukraine will meet red-hot inflation head-on, creating a “stag-flationary” environment.
Most stock futures and indices outside Asia traded cautiously higher on Friday, following a US inflation data print that showed price pressures at their highest in over 40 years. The European Central Bank jolted euro investors by announcing a swifter wind-down to its bond buying as it too grapples with a slowing economy and rising inflation.
The MSCI All-World index eased 0.3%, reflecting weakness in Asian stocks. It was set for a decline of 1.5% this week, marking the fifth consecutive week of losses.
“After another hot inflation report, many investors on Wall Street are growing concerned that stagflation risks could derail the economy later this year,” OANDA strategist Jeffrey Halley said.
S&P 500 futures rose 0.2%, while those on the Dow Jones gained 0.2%, and Nasdaq 100 futures edged up 0.1%, indicating the US benchmark indices could recover some of Thursday’s losses that came after the rise in the US Consumer Price Index.
CPI inflation rose by 7.9% in February, its fastest since January 1982. The increase was driven by surging prices for raw materials, as well as in rent and food, just as the Omicron wave of the coronavirus subsided. The data only captured the first few days of the impact of Russia’s attack on Ukraine on energy prices.
Gold, meanwhile, is set for a 1.4% rise this week, having briefly shot above $2,000 an ounce thanks to safe-haven buying. Given its status as a hedge against inflation, analysts said gold could build on those gains.
“We continue to like gold as a hedge against the inflationary debasement of fiat currency, geopolitical tensions, and equity market volatility . Should gold see a sustained break above the $2075 high, it would signal the current retracement is complete and that the next leg higher has commenced,” City Index analyst Tony Sycamore said.
Gold was last down 0.2% on the day at $1,995 an ounce, still close to its highest level since August 2020.
The ECB on Thursday said it would speed up the process of winding down its monthly asset purchases, while cutting its growth forecasts for the eurozone and raising its estimates of future inflation.
“This move appears to open the central bank’s options with respect to potentially raising rates by the end of this year, although it doesn’t lock them into doing so,” CMC Markets chief strategist Michael Hewson said.
The euro fell for a second day, easing 0.1% against the dollar, as investors weighed up the impact on the eurozone from Russia’s war in Ukraine. Tighter monetary policy could, in theory, bolster the currency.
The pan-European Stoxx 600 stock index gained 0.6% on the day, set for a gain of 1.6% this week.
Crude oil traded steadily just above $100 a barrel, as it headed for a decline of 5% this week, its most volatile since the depths of the crisis in April 2020 that saw US crude dive below $0.
Brent crude has swung as much as 30%, sending the oil price towards $140 at one point, as investors reacted to sanctions on Russian energy that have the potential to create a massive supply deficit.
Brent crude futures were last up 2.8% at $112.40 a barrel, while WTI futures were up 2.2% at $108.50.
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