ASIA
The Nikkei 225 Index rose 0.77% to close at 30,808 while the broader Topix Index gained 0.18% to 2,162 on Friday, with both benchmarks reaching their highest levels since August 1990 as strong domestic earnings and a weak yen boosted the outlook for Japanese stocks. Local shares also tracked gains on Wall Street overnight as progress on debt ceiling negotiations and upbeat corporate updates in the US lifted market sentiment. Moreover, investors digested data showing Japan’s core inflation accelerated again in April, challenging the Bank of Japan's view inflation will slow back below its target later this year as cost pressures dissipate. Technology stocks led the charge, with strong gains from Tokyo Electron (0.9%), Abalance (18.2%), Keyence (1.1%), Recruit Holdings (4.6%) and Lasertec (1%). Other index heavyweights also advanced, including Fast Retailing (2.2%), Shin-Etsu Chemical (3.3%) and Olympus Corp (4.7%).
The BSE Sensex dropped 113.1 points or 0.2% to a two-week low of 61,318.6 in morning trade on Friday, falling for the fourth straight session while pointing to a 1.2% fall weekly, as market participants continued to book their profits following a rally earlier in the week that saw the index notching a five month-peak. On Wall Street, shares closed higher overnight, as leaders in Washington were working towards avoiding a damaging debt default. Still, losses were capped by reports that foreign investors extended their buying streak for the 16th consecutive session Thursday, the longest such streak since December 2020, buying almost INR 10 billion worth of Indian shares as of Thursday. Oil & gas, consumers, pharmaceuticals, and metals moved lower, amid falls from JSW Steel (-1.3%), ITC (-0.9%), Titan Company (-0.7%), and Pfizer (-0.4%). Punjab National Bank, NTPC, Power Grid, Welspun Enterprises, and Sun TV Network are among companies that will announce earnings results later today.
The Shanghai Composite fell 0.42% to close at 3,284 on Friday, erasing gains from the previous session, with nearly all sectors participating in the decline. Investors continued to assess the strength of China’s post-pandemic recovery after a series of economic data pointed to a challenging recovery path. Financial and industrial stocks led the market lower, with notable losses from Ping An Insurance (-1.4%), CNPC Capital (-4.8%), Avic Industry-Finance (-4.7%), China State Construction (-1.8%) and China Railway Group (-2.3%). New energy stocks also declined, including Tianqi Lithium (-1.6%) and Contemporary Amperex (-0.9%). Still, the benchmark index gained 0.37% this week, its eighth weekly advance in ten.
EUROPE
The German DAX reached a record high of 16,275 on Friday, and the benchmark Stoxx 600 rose by 0.8% to its highest level in over a year, driven by optimism surrounding a potential resolution to the US debt ceiling issue. President Joe Biden and top US congressional Republican Kevin McCarthy have expressed their determination to promptly reach an agreement to raise the government's borrowing limit. However, at the closing bell in Europe, it was reported that GOP negotiators had walked out of a debt ceiling meeting, casting some uncertainty. The ongoing corporate earnings season in Europe has been strong, with major companies consistently surpassing expectations. In terms of economic data, German producer price inflation has slowed down to its lowest level in over two years, indicating a further easing of inflationary pressures in Europe's largest economy.
The FTSE 100 index closed about 0.3% up at 7,742 on Thursday, after two straight sessions of losses and tracking a positive mood across international markets, boosted by encouraging signs that a deal to raise the U.S. debt ceiling could be reached soon, thereby averting the risk of default. On the corporate front, gains in retailers offset a sharp sell-off in BT shares (-5%) after it said it will shed 55,000 workers over the next decade. JD Sports (+5.9%) continued its sharp rise after it said yesterday profits could hit £1bn this year. Meanwhile, luxury fashion firm Burberry slumped around 5% despite posting a 16% sales increase, primarily driven by strong demand from Chinese consumers.
The CAC 40 index rose about 0.6% to close at a near one-month high of 7,492 on Friday, tracking its European peers higher, as investors were monitoring US debt ceiling negotiations. On Thursday, President Joe Biden and top US congressional Republican Kevin McCarthy have expressed their determination to reach an agreement to raise the government's borrowing limit. However, at the closing bell in Europe, it was reported that GOP negotiators had walked out of a meeting, saying the White House demands were unreasonable. At the same time, Federal Reserve Chair Jerome Powell said that tighter credit conditions amid the recent turmoil in the US financial system may ease rate hike pressures. Among single stocks, the top gainers were Veolia Environment (+2.1%), Stellantis NV (+1.9%), Saint Gobain (+1.8%) and Sanofi (+1.8%). By contrast, Kering (-1.8%), EssilorLuxottica (-1.6%) and Thales (-0.8%) posted the largest losses. The CAC 40 gained about 1% this week.
The FTSE MIB index rose about 1.1% to close at a more than two-week high of 27,520 on Friday, outperforming its European counterparts. The main support came from shares of Interpump Group (+4.4%), following the company's announcement of acquiring a small-scale milking products operation in New Zealand, which is expected to bolster its position in the food sector. The utilities sector also performed well, led by Hera (+3.1%) and A2a (+2.3%). Meanwhile, investors continued to monitor the ongoing US debt ceiling negotiations and digested the speech from Federal Reserve Chair Jerome Powell that eased concerns about further rate hikes. Domestically, caution prevails as rating agency Moody's is set to give an update on the Italian sovereign rating later in the day. The FTSE MIB closed the week about 0.6% higher.
