A strong dollar helped boost European equities Friday, while the euro hit a one-month dollar low before France’s presidential election.
US stocks were mostly higher, after ending Thursday with solid gains.
The trading caps a tough week dominated by the US Federal Reserve’s hawkish tone in minutes from its March monetary policy gathering, which sent the dollar climbing against its main rivals.
The euro sank to $1.0837 before Sunday’s first round French presidential vote, with the unit dented also by European officials’ reticence to move as aggressively as the Fed on tackling soaring inflation.
Oil prices rose despite the recent release of nations’ strategic reserves to combat recent Ukraine war-driven turmoil over Russian crude supplies.
– Risk appetite returns –
“Today’s positive session for European markets appears to have more to do with the fact that the strength of the US dollar has pushed both the pound and the euro lower, with the pound falling to its lowest levels since November 2020, below the 1.3000 level,” said CMC Markets analyst Michael Hewson.
Shares in commodities firms have had a boost as commodity prices have risen in recent weeks because Ukraine and Russia are key producers of raw materials.
Financial firms were given a shot in the arm on Friday as investors became more willing to take risks.
“The fortunes of financial stocks have been closely aligned with risk appetite over the last couple of months and we’re continuing to see that now,” said OANDA analyst Craig Erlam.
“If the economy can weather the storm, they could be in a strong position given how higher interest rates are generally beneficial for them.”
The Fed has made clear it intends to act more decisively to rein in 40-year-high inflation by ramping up borrowing costs and offloading bond holdings.
Markets have come under huge pressure this year as the end of ultra-cheap central bank cash, a Covid-fuelled slowdown in China’s economic activity, the war in Ukraine and soaring inflation come together in a perfect storm.
However, so far this year the London FTSE 100 index has won more than three percent in value, boosted by heavyweight commodity and oil companies whose share prices have benefited from soaring prices of raw materials.
In contrast, Frankfurt’s DAX has shed in excess of 10 percent and the Paris CAC 40 has lost eight percent, hit also by energy security concerns as a result of EU nations’ reliance on gas supplies from sanctions-hit Russia.
– Key figures around 1530 GMT –
New York – Dow: UP 0.7 percent at 34,811.40 points
EURO STOXX 50: UP 1.4 percent at 3,855.55
London – FTSE 100: UP 1.6 percent at 7,669.56 (close)
Frankfurt – DAX: UP 1.5 percent at 14,283.67 (close)
Paris – CAC 40: UP 1.3 percent at 6,548.22 (close)
Tokyo – Nikkei 225: UP 0.4 percent at 26,985.80 (close)
Hong Kong – Hang Seng Index: UP 0.3 percent at 21,872.01 (close)
Shanghai – Composite: UP 0.5 percent at 3,251.85 (close)
Euro/dollar: DOWN at $1.0877 from $1.0879 late Thursday
Pound/dollar: DOWN at $1.3020 from $1.3075
Euro/pound: UP at 83.53 pence from 83.20 pence
Dollar/yen: UP at 124.32 yen from 123.95 yen
Brent North Sea crude: UP 1.0 at $101.61 per barrel
West Texas Intermediate: UP 1.3 percent at $97.32 per barrel
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