Wall Street ended the week lower, even after stocks rebounded in a volatile trading session punctuated by mixed economic data from across the world and escalating disputes between the US and China.
The S&P 500 closed up 0.4 per cent on Friday but declined 2.3 per cent for the week as a whole. The tech-heavy Nasdaq Composite has slid 1.2 per cent over the past five trading days.
US stocks had opened lower on Friday after the US Department of Commerce said it would tighten export controls targeting the Chinese telecoms equipment maker Huawei and its US suppliers in the semiconductor industry.
Disappointing economic data, including figures that showed a record drop in industrial production and retail sales in April, also weighed on investor sentiment.
Chipmakers were hit particularly hard. The Philadelphia Semiconductor index, which tracks 30 companies that design, distribute and sell chips, fell more than 2 per cent, with Qualcomm sinking 5.1 per cent.
Tensions between the global powers have intensified this week as President Donald Trump sought to pin the blame on China for the surge in coronavirus cases in the US and elsewhere in the world.
Optimism about the relaxation of lockdowns across the US and Europe has been tempered this week by new clusters of virus outbreaks in countries such as South Korea and China and central bank warnings of a protracted economic recovery.
The price of gold rose to $1,744 a troy ounce on Friday as the mix of concerns nudged investors towards haven assets.
In Europe, Frankfurt’s Xetra Dax stock index climbed 1.1 per cent on the day, following figures showing German growth fell slightly less than economists had expected. The eurozone’s biggest economy shrank 2.2 per cent in the first quarter, its fastest contraction since the 2008 financial crisis.
The FTSE 100 rose 1 per cent on the day, while the continent-wide Stoxx 600 was up 0.5 per cent.
“Investors are seeing a dichotomy between the bullish views being expressed in many markets and the ongoing output of bad economic data,” said James Ashley, head of international market strategy at Goldman Sachs Asset Management.
Sterling fell, weakening 0.9 per cent against the dollar, after the UK’s chief Brexit negotiator said “very little progress” had been made in the latest round of negotiations, with a deadline only weeks away.
Shares across Asia-Pacific inched higher following fresh signs China’s economy could be recovering from the coronavirus crisis.
Official data from China on Friday showed growth in industrial output resumed last month, while retail sales and investment in capital goods such as machinery shrank at a slower pace than previously. The upbeat data also lifted mining companies listed in Europe such as Anglo American and BHP.
“If the recovery momentum continues, China could avoid another GDP contraction” in the second quarter, said Betty Wang, senior China economist at ANZ.
Japan’s Topix index closed 0.5 per cent up, while Hong Kong’s Hang Seng index dipped 0.1 per cent.
Oil prices rose following signs that demand was recovering. Brent crude, the international benchmark, settled 4.4 per cent higher at $32.50 a barrel, while West Texas Intermediate, the US marker, gained 6.8 per cent to $29.43 a barrel.
“The fundamentals in the market are clearly improving,” said Warren Patterson, head of commodities strategy at ING. “But we still believe that in the near term, the upside is limited given that we are still in a surplus environment and as there is plenty of inventory.”
Source: Economy - ft.com
