Market snapshot: laboured progress for stocks

Events and commentary have pushed markets around this week, but generally the mood has been more positive. Our head of markets explains what's moving stock prices right now.

Markets have had a generally positive week by recent standards, even though the twin issues of inflation and aggressive rate hikes remain firmly in play, meaning that any progress has been laboured.

Earlier in the week, the Federal Reserve minutes reiterated the bank’s determination to temper inflation, with a rise of 0.75% at the upcoming July meeting now all but nailed on, according to consensus.

However, some less hawkish comments from a couple of Federal Reserve members lifted investors’ spirits, with one suggesting that there was a “good chance” of a soft landing for the economy, and another stating that fears of a recession were “overblown”.

This was enough to tempt some buyers back into the market, especially in the high-growth and big technology space which has so far borne the brunt of investor cynicism in the face of a rising interest rate environment.

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The Nasdaq ended last night's session strongly, although remaining down by 26% in the year to date. The other main indices also ended ahead but are cumulatively negative, with the Dow Jones and S&P500 having fallen by 14% and 18% respectively so far this year.

Economic data also added to an intriguing recent set of figures, with unemployment claims rising to a six-month high, suggesting that the labour market could be cooling, which would be an early success for the Fed’s current actions.

The release of the non-farm payroll figures later on Friday will add further colour to the employment situation, with the expectation that 250,000 jobs were added in June, as compared to 390,000 in May.

Another potential sign of easing inflationary pressure has been the levelling off of the oil price. While it still stands ahead by 35% in the year to date, this is far from the highs seen earlier in the year, even though tight supplies globally have capped declines in the last couple of days.

Asian markets were mostly positive, despite the shock news of the shooting of former Japanese Prime Minister Abe, which initially pushed up the haven Yen currency.

Elsewhere, an announcement that the government will allow local authorities to sell 1.5 trillion Yuan of bonds to support infrastructure spending was warmly received by investors looking for signs of support for the beleaguered Chinese economy.

Following a strong previous session, the FTSE100 took a pause for breath in early exchanges Friday, dipping slightly to stand down by 3% in the year to date.

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The minor markdowns were mainly centred around energy and commodities, while the FTSE250, seen as a more accurate barometer for UK economic prospects, also dipped slightly. The index has now declined by 20% in the year to date, with the outcome of the current political machinations undecided, and any change in government policy support for the economy as yet unknown.