NEW YORK/LONDON: MSCI's global stock index barely rose on Friday while the US dollar edged down after the US Federal Reserve's (Fed) favoured inflation reading showed moderating prices and investors waited anxiously for clues on interest rate policy days ahead of the central bank's closely monitored meeting.
Treasury yields rose on concerns about the growing supply of government debt, with next week's Fed meeting in focus and expectations that the Fed will have to address efforts to reduce its balance sheet.
The personal consumption expenditures (PCE) price index increased 0.2 per cent last month after an unrevised 0.1% drop in November, the Commerce Department's Bureau of Economic Analysis said. In the 12 months through December, the PCE price index increased 2.6 per cent, matching November's unrevised gain.
Still, pending US home sales shot up in December by the most since June 2020, indicating prospective buyers may be getting drawn from the sidelines by stabilising mortgage rates.
"Broadly this week we got a nice support for the soft landing scenario," said Mona Mahajan, principal and senior investment strategist, Edward Jones, New York citing Friday's inflation reading, Thursday's strong gross domestic product data and improving manufacturing and services data earlier in the week.
But Mahajan detected jitters ahead of the Fed's meeting, ending on Jan 31, as the central bank will likely "acknowledge the better inflation and economic data but may still push back on the markets pricing of six rate cuts this year".
"Investors are in wait and see mode," she said, adding that regarding inflation, the Fed "will probably not yet declare mission accomplished".
The MSCI world equity index, which tracks shares in 49 nations, gained 0.08 per cent, after earlier hitting its highest level in almost two years. For the week it was showing a 1.3 per cent gain.
Wall Street indexes were a mixed bag with the S&P 500 snapping a five-session streak of record closing highs, falling 3.19 points, or 0.07 per cent, to 4,890.97 on the day.
For the week the benchmark index added 1.0 per cent while the Nasdaq added 0.9 per cent and the Dow industrials advanced 7.0 per cent, with all three clocking their third weekly gain in a row and their 12th weekly gain out of the last 13 weeks.
For Friday's session, the Dow Jones Industrial Average rose 60.30 points, or 0.16 per cent, to 38,109.43, and the Nasdaq Composite lost 55.13 points, or 0.36 per cent, to 15,455.36.
Europe's equity index earlier closed up 1.1%, marking a 3% gain for the week, which was its biggest weekly percentage advance since the week starting Oct 30.
This was after the European Central Bank (ECB) signalled on Thursday that it could cut rates by April. While ECB chief Christine Lagarde said it was "premature" to discuss easing, money markets priced an almost 85 per cent chance of a first quarter point rate cut in April.
In currencies, the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was down 0.04 per cent.
The US dollar rose 0.3 per cent against the yen to 148.09 but the euro was up 0.1 per cent on the day at US$1.0855, having lost 1.64 per cent in a month.
In Treasuries, the yield on benchmark 10-year Treasury notes rose to 4.1412 per cent compared with its US close of 4.132 per cent on Thursday. The two-year yield, which rises with traders' expectations of higher Fed fund rates, touched 4.3571 per cent compared with a US close of 4.314 per cent.
In commodities, oil prices settled higher as positive US economic growth and signs of Chinese stimulus boosted demand sentiment, while Middle East supply concerns added support.
US crude settled up 0.84 per cent at US$78.01 a barrel, their highest settlement level since Nov 29. Brent crude finished at US$83.55 per barrel up 1.36 per cent on the day for their highest closing level since Nov 30.
In precious metals, spot gold prices fell 0.06 per cent to US$2,018.58 an ounce as investors' attention shifted to the Fed's policy meeting next week as they waited for insights into the interest rate outlook.
Earlier in Asia, MSCI's broadest index of Asia-Pacific shares excluding Japan closed down on the day but snapped a three-week losing streak for a 1.6 per cent weekly rise.
China's CSI blue-chip index dipped on Friday but scored a near 2.0 per cent weekly gain after three weeks of losses.
Investors poured almost US$12 billion (RM56.73 billion) into Chinese equity funds in the week to Wednesday, a BofA Global Research report calculated on Friday. That marks the largest inflow since 2015 and the second largest ever. - Reuters