Summary:

Wall Street stocks opened higher as signs of the US economy cooling down fuel optimism that the Federal Reserve will halt its policy of raising interest rates. However, tech stocks Apple and Microsoft suffered losses as economic data indicated a weakening job market and moderating consumer spending. Despite this, the Federal Reserve hints at more interest rate hikes, although market and Federal Reserve expectations about the economy’s direction differ. Investors have priced in a 72% chance of another rate hike in July. In the foreign exchange market, the yen and sterling strengthen against the dollar, while the European Central Bank takes more aggressive measures than the Federal Reserve. The Bank of Japan keeps its interest rates as expected but acknowledges inflation above target. Asian markets show positive results.

Wall Street stocks opened cautiously higher on Friday as investors drew optimism from signs that the US economy is cooling down, fueling hopes that the Federal Reserve will soon halt its policy of raising interest rates.

The Wall Street benchmark S&P 500 gained 0.2% on the opening bell, while the Nasdaq Composite lost 0.1%, while shares of top tech stocks Apple and Microsoft lost 0.4% respectively and 0.7%.

The duo hit record highs overnight after economic data indicated the job market was weakening and consumer spending was moderating, which investors interpreted as a sign the Fed may need to step up. rates to tame inflation.

Even so, the Fed this week hinted that there would be more interest rate hikes this year. The central bank kept its federal funds rate steady at a target range of 5 to 5.25% when policymakers met earlier this week.

“Market expectations and Federal Reserve expectations about the direction of the economy are moving in different directions,” said James Knightley, ING’s chief international economist. “Term contracts [are] not even fully pricing in one hike, let alone the two the Fed is currently projecting,” he noted.

Investors have priced in a 72% chance that the Fed will proceed with another quarter-point hike at its next policy meeting in July, according to data compiled by Refinitiv and based on the prices of interest rate derivatives.

The yield on two-year US Treasuries rose 0.1 percentage point to 4.75% on Friday. The 10-year benchmark yield added 0.05 percentage points to 3.78%. Bond yields rise when prices fall.

The yen and sterling strengthened against the dollar, with the yen climbing as high as ¥141, its highest level since November, and the pound hitting £1.28, its highest point since April last year .

Meanwhile, Europe’s regional Stoxx 600 gained 0.5%, while France’s Cac 40 gained 1.3% and London’s FTSE 100 rose 0.3%.

The European Central Bank took a more aggressive move than the Fed on Thursday, raising its deposit rate by 0.25 percentage point to 3.5%. highest level since July 2001.

The ECB signaled further monetary tightening to come, predicting that inflation will not return to its 2% target for another two years.

Japan’s Topix index gained 0.3% after the Bank of Japan kept its overnight interest rate at minus 0.1% as expected, even as inflation was above the central bank’s target by 2%.

The country’s benchmark 10-year government bond yield remained stable at 0.4% following the announcement, while the central bank said it would continue to allow it to fluctuate 0.5 percentage point above or below below the target return of zero.

Elsewhere in Asia, China’s CSI 300 rose 1% and Hong Kong’s Hang Seng index gained 1.1%.