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US stocks saw gains at the open on Friday, driven by the rising prices of crude oil, which increased demand for energy stocks.
Wall Street’s S&P 500 grew by 0.4% while the Nasdaq Composite, focused on technology, gained 0.6% during the New York opening. Energy stocks experienced the most significant growth after Brent crude rose by 0.5% to $90.50 per barrel, reaching its highest point since November. Meanwhile, West Texas Intermediate, the US equivalent, increased by 0.5% to $87.34.
This week, US indices faced declines as concerns grew among investors about the possibility of higher interest rates. This followed robust data on the US services sector and labor market. Traders now await the US inflation report next week to gain insights into the Federal Reserve’s policy plans, more than a year after the central bank began raising rates.
Most investors predict that the Federal Reserve will maintain steady interest rates at the next meeting on September 20. However, there is less agreement on whether there will be further tightening by the end of this year.
European stocks remained flat as investors evaluated the future of interest rates in the eurozone. The Stoxx Europe 600, representing the entire region, saw a 0.1% increase after seven consecutive days of losses. France’s CAC 40 grew by 0.4%.
Utilities stocks, which tend to be less sensitive to economic cycles and attract investors during downturns, were the main drivers in Europe. They saw a 0.5% increase. While most investors believe that the European Central Bank will refrain from further tightening at its upcoming policy meeting, some still bet on additional rate hikes before the year ends.
“We do not think the ECB will want to ‘shock’ the market, particularly against a backdrop of weakening economic data,” commented Paul Hollingsworth, Chief European Economist at BNP Paribas.
The moves in the markets occurred amid a week where China released discouraging economic data, indicating a decline in exports and imports, as well as a weakening services sector.
Asian markets experienced declines on Friday, with tech stocks leading to a 0.5% drop in the benchmark CSI 300. Japan’s Topix fell by 1%, while Hong Kong markets were closed due to storms and flooding. The world’s largest contract chipmaker, TSMC, which supplies Apple, saw its shares drop by 0.6%.
This week saw a significant decline in tech stocks in the US and China following reports that Beijing had banned central government officials from using iPhones for work. On Friday, Apple, the industry giant, saw its shares rise by 1.2%.
Meanwhile, oil prices continued to rise, resuming an upward trend from earlier this week when Saudi Arabia and Russia announced their plans to extend supply cuts until the end of the year.
However, analysts do not expect a significant increase in oil prices due to the overall economic slowdown and the struggles of the Chinese economy to meet its growth targets, as noted by Nadège Dufossé, Global Head of Multi-Asset at Candriam.
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