Global markets rise on positive earnings and interest rate cut expectations

Stock markets were buoyed on Friday by strong earnings results and hopes of a U.S. interest rate cut, while currency markets remained jittery after suspicions that Tokyo might intervene to support the yen.

U.S. stock futures were mixed, but Europe’s STOXX 600 index hit a one-month high and London’s FTSE-100 rose 0.4%. Ericsson gained 8% after reporting a smaller-than-expected drop in Q2 sales. Major U.S. banks including JPMorgan Chase, Wells Fargo and Citigroup are due to start reporting earnings later today.

The market’s focus temporarily shifted away from U.S. interest rates after recent inflation data suggested the Federal Reserve could cut rates in September. James Rossiter of TD Securities noted that while the CPI data was positive for stocks, other indicators suggested a potential weakening of the U.S. economy, raising concerns in some sectors. The Nasdaq closed nearly 2% lower on Thursday after declines in Nvidia, Apple and Tesla.

The yen has seen wild swings, gaining almost 3% on Thursday before stabilising. Japan’s top currency diplomat has hinted at potential intervention, if necessary, in currency markets. The yen’s moves have weighed on other currencies, with the euro and sterling managing to reverse earlier losses. Meanwhile, Asian markets showed mixed reactions to China’s trade data, which showed strong export growth but weak import data, underlining the need for further economic stimulus.

Sterling rose near a one-year high on better-than-expected GDP data and comments from Bank of England policymakers. Oil prices rose as strong summer demand and easing inflation boosted investor confidence, while gold fell slightly.

(Disclaimer: Based on information obtained from the agency.)