New York: Global stocks rose on Friday, on track for their best week in nearly a year, on hopes that US companies will report strong earnings next week. But investors were still cautious, buying the US dollar and driving gold prices up more than 1%.
Trading on Wall Street was also volatile after three consecutive sessions of strong gains, with many investors going for cash due torecurring fears of a double-dip recession and the upcoming earnings season, which officially opens on Monday when Alcoa reports.
“We are all holding our breath for earnings season to start,” said Kim Caughey, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. “Companies are very well positioned because they’re lightly staffed now and are very productive.”
The MSCI world equity index rose 0.4% during the session, boosting weekly gains to 4.8% — which could be the highest since the 6.6% gain recorded in the week ending 18 July, 2009.
The FTSEurofirst 300 index of top European shares ended 0.61% higher, also its biggest weekly rise since July 2009. Shares of ,iners and metal producers led gains on hopes for strong demand from China and positive quarterly results from US aluminium giant Alcoa.
Gains on Wall Street were more modest. The Dow Jones industrial average added 4.54 points, or 0.04%, to 10,143.53, while the Standard & Poor’s 500 Index rose 1.72 points, or 0.16%, to 1,071.97. The Nasdaq Composite Index was up 6.51 points, or 0.30%, at 2,181.91.
Alcoa shares rose 0.8% to $10.81. Google Inc added 1.6% to $464.00 after Beijing gave it the green light to continue operating its China search page.
But sentiment remained fragile as many investors worry the global economy could slip back into recession. Even with the gains of the last three days, the S&P 500 is still down 12% from its most recent closing high in late April.
Underscoring the rise of concerns about the global economy, fund tracker EPFR reported on Thursday that equity funds worldwide had outflows of more than $11 billion in the first week of July.
Euro resumes slide
The euro fell against the dollar as investors pocketed part of the rally that had taken the single currency to its highest level in more than two months.
Traders said the euro was unable to remain above the key resistance level of $1.27 due to lingering worries about the euro-zone economy.
“Since the $1.1877 June low, the euro has rallied an impressive 6.1%,” said Camilla Sutton, a currency strategist at Scotia Capital in Toronto. “However, near-term risks continue to loom and we will see another bout of euro weakness.”
The single European currency was down 0.46% at $1.2635 from a previous session close of $1.2693.
On Thursday, the single currency got a lift after Jean-Claude Trichet, the European Central Bank president, said the euro zone’s economy performed much better in the second quarter. However, he also said the region would grow “at a moderate and still uneven pace in an environment of high uncertainty.”
The dollar was also up against a basket of major currencies, with the US Dollar Index up 0.14%.
Against the Japanese yen, the greenback was up 0.16% at 88.52.
US Treasury prices fell as higher global stocks reduced the safe-haven allure of government bonds but also because investors made room for $69 billion worth of coupon-bearing supply next week.
The US Treasury Department will sell $35 billion in three-year debt on Monday, $21 billion in 10-year notes on Tuesday and $13 billion in 30-year bonds on Wednesday.
The benchmark 10-year US Treasury note was down 6/32 in price, with the yield at 3.0574%.
Gold prices rose back above $1,210 an ounce. Some investors were cautious about the US earnings season and others found the metal attractively priced. Spot gold jumped 1.07%, to $1,209.20 an ounce.
US crude oil prices rose 19 cents, or 0.25%, to $75.63 per barrel.