European stocks climb as Dax closes at record highs

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European stocks rallied on Friday, pushing Germany’s Dax close to an all-time high, as investors awaited central bankers’ speeches later in the day for clues about the future direction of interest rates.

The Frankfurt benchmark index gained 0.3% in early trading, bringing it within 100 points of a high of 16,290 set in November 2021, as investors were encouraged by further signs of cooling inflation.

The country’s producer price index for April showed the annual rate of inflation had eased to 4.1% from 6.7% in March. The reading was 0.1 percentage point higher than the forecast by economists polled by Reuters.

The European regional Stoxx 600 rose 0.4%, while London’s FTSE 100 gained 0.3% on market open.

Traders also took a cue from Wall Street’s gains in the previous session, which followed the announcement that Washington politicians could vote on a bill to raise the US debt ceiling as early as next week, averting the default before the June 1 deadline.

Investors were also preparing for public speeches by European Central Bank President Christine Lagarde and board member Isabel Schnabel, which could offer an indication of the path for the interest rates in the euro area as they appear in separate events throughout the day.

The central bank slowed the pace of its rate hikes this month, raising the deposit rate by a quarter of a percentage point to 3.25% and saying it had more ground to cover.

Federal Reserve Chairman Jay Powell and the Bank of England’s Jonathan Haskel will also speak on Friday.

Contracts tracking Wall Street’s benchmark S&P 500 and those tracking the heavy Nasdaq 100 were flat ahead of the New York open.

The yield on interest rate sensitive two-year Treasuries fell 0.05 percentage point to 4.23%. The 10-year benchmark yield lost 0.02 percentage points to 3.63%. Bond yields rise when prices fall.

The dollar index, which tracks the currency against a basket of six peers, fell 0.2%.

Asian equities fell as pessimism about the tech sector prevented the US rally from spreading to the region.

Hong Kong’s Hang Seng Index fell 1.5%, while China’s CSI 300 benchmark stock dropped 0.3% after weak third-quarter results from tech giant Alibaba dampened sentiment. investors.

China’s onshore currency fell 0.1% to 7.027 against the US dollar, its lowest level since December after April Chinese data showed weak consumption and industrial production, as well as record youth unemployment. The numbers pointed to a faltering economic recovery after the dissolution of its zero-Covid limits last year.