The S&P 500 and the Dow posted their biggest weekly gain since February and March, respectively, with the so-called reflation trade gaining renewed momentum, as investors seem to have acknowledged that the Fed will not rush to hike interest rates despite mounting inflation pressures. Aside from a more dovish stance from the US central bank, a breakthrough in infrastructure spending talks in Washington sparked further buying in those groups that do well in an economic recovery.
The S&P 500 rose 2.7% for the week, its strongest weekly gain since early February as Nike and bank stocks rose, and weaker-than-expected inflation data eased worries about a sudden tapering in stimulus by the Federal Reserve. The Nasdaq Composite (.IXIC) dropped 0.06% after holding near the previous session's record high. MSCI's gauge of stocks across the globe (.MIWD00000PUS) closed at a record high of 721.91.
Shares in London have closed at their highest level in one week, with the benchmark FTSE 100 rising for the second consecutive session to finish above the 7,100 level, helped by materials and energy shares. Market sentiment was dominated by optimism over the region’s economic recovery. The pan-European STOXX 600 (.STOXX) rose 0.13%, ending the week with gains of 1% following sharp swings. FTSE 100 index (.FTSE) was up 0.37% and Germany's DAX (.GDAXI) edged up 0.12%.
Emerging market stocks (.MSCIEF) rose 0.89%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) ended about 1% higher, while Japan's Nikkei (.N225) rose 0.66%. The S&P BSE Sensex added more than 220 points to end at an all-time high of 52,925 on Friday, with metals, financials, and pharma stocks among the best performers.
Yields for benchmark 10-year U.S. Treasuries, jumped back above 1.50% to close out a week in which yields notched their largest gains since March. Germany's 10-year yield, the benchmark for the euro area, edged up to -0.156%.
The U.S. dollar eased against a basket of other currencies, in choppy trading. The Japanese yen strengthened 0.09% versus the greenback and the euro was up 0.07%.Mexico's peso extended gains after a surprise interest rate hike, while Latin American currencies were set to outpace their emerging market peers this week on hawkish central bank signals. Sterling traded at $1.3885, down 0.27% on the day and on track for its worst month versus the dollar since September.
Spot gold added 0.3% to $1,779.74 an ounce. U.S. gold futures gained 0.61% to $1,776.60 an ounce.
WTI crude futures rose to above $74 per barrel on Friday, the highest since October 2018, with the benchmark recording a fifth consecutive week of gains on expectations demand recovery would continue and supply remains in check. The EIA Petroleum Status Report showed the US crude oil inventories fell by more than expected 7.61 million barrels in the week of June 18th, a fifth consecutive period of decline and the largest since the last week of April. Brent futures rose 62 cents, or 0.8%, to settle at $76.18 a barrel.