US stocks finished mixed on Friday, as investors were digesting fresh inflation data and assessing the future path of the Federal Reserves. The Dow Jones closed 105 points higher, supported by gains from Chevron (+2%) and Merck & Co (+1.8%). Meanwhile, the S&P 500 edged lower by 0.1% and the Nasdaq lost nearly 0.7% pulled down by a sell-off in shares of AMD (-2.4%), Nvidia (-3.6%) and Micron (-1.6%). Producer prices, which tracks the price wholesalers pay for raw goods, rose 0.3% on the month, raising bets the Fed will need to keep rates higher for longer. Yesterday, both headline and core consumer inflation came below forecasts, but remained well above the Fed's 2% target. At the same time, San Francisco President Mary Daly noted that the Fed has more work to do to bring inflation down. On the week, the Dow dipped 0.1%, while the S&P 500 lost 0.7% and the Nasdaq sank 1.8%, a second consecutive week of losses.
European stocks fell on Friday, with both the DAX and the STOXX 600 falling about 1.1%, after producer prices for the US rose more than initially expected, raising concerns the Fed will need to keep interest rates higher for longer. Also, the enthusiasm around the US inflation numbers released yesterday faded as the gauge remains well above the central bank target and as San Francisco Federal Reserve Bank President Mary Daly signaled the Fed may not be done yet with fighting rising prices. Concerns about the Chinese economy, particularly the property sector also weighed on investors' mood. Among single stocks, UBS shares rose 4.7% after the company said that it no longer requires the government guarantee it had obtained to assist its struggling competitor, Credit Suisse. Bechtle added 6.4% after reporting better-than-expected second-quarter results. On the week, the DAX lost 0.7% while the pan-European STOXX 600 was little changed.
The BSE Sensex index fell 0.56% to 65323 on Friday, extending a 0.5% loss in the previous session led by financials after the RBI unexpectedly requested banks to set aside more of their deposits under the cash reserve ratio to manage liquidity. IndusInd Bank was among the worst performers, down by 2.3%. Consumer stocks extended losses from the previous day due to short-term domestic price concerns, with Asian Paints and Hindustan Unilever down by 1.6% and 1.4%, respectively. The pharma index also fell over 1% due to post-earnings declines in Biocon and Alkem Laboratories. In contrast, HCLTech surged 3.24% following news of a global partnership with Verizon. For the week, the BSE Sensex recorded a 0.6% decline, marking the third consecutive week of losses.
The Shanghai Composite slumped 65.31 points or 2.01% to end at 3,189.25 on Friday after closing higher in the prior session, approaching its lowest level in over two weeks while plunging 3% for the week, pressured by intensifying fears over the impact of a downturn in the Chinese property market after Country Garden Hlds. failed to repay its two US dollar notes by an initial deadline. Meantime, concerns mounted about deteriorating economic recovery in China after the first consumer deflation in more than 2 years, further falls in factory-gate prices and disappointing trade data. Meantime, US stock futures were sluggish, as traders assessed whether the Fed will need to hike interest rates again in September. Limiting the losses were reports that Beijing will allow local governments to raise money to repay their mounting debts. All sectors dragged down the index, amid falls from Ping An Insurance (-3.9%), Kweichow Moutai (-2.2%), Contemporary Amper (-2%), and Bank of China (-1.3%).
The S&P/ASX 200 dropped 12.80 points or 0.17% to close at 7,344.60 on Friday, snapping three-day gains, as investors were cautious after Fed Bank of San Francisco President Mary Daly said that inflation in the US was still too high and the central bank should do more work. Meantime, Australia's outgoing central bank chief Philip Lowe suggested that monetary policy may need to be tightened further as CPI remains elevated at 6% mainly due to a further rise in cost of services. Non-energy minerals, consumer non-durables, and utilities weighed the index, amid losses from Fortescue Metal Group (-2.2%), Mineral Resource Ltd. (-1.7%, Santos Ltd. (-1.6%), Wisetech Global Ltd. (-1.5%), and Pilbara Minerals (-1.1%). Still, the index added 0.3% for the week, supported by hopes that key trading partner China eventually will deliver a big stimulus to spur recovery. Traders now await next week's releases that include labor data for July, the latest RBA meeting minutes, and Q2 wage prices.
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