The primary U.S. index futures indicate a positive opening on Friday, driven by investor reactions to important inflation data.
Initial buying momentum is likely propelled by a Commerce Department report that aligns consumer price inflation figures for May with economists' expectations. Specifically, the personal consumption expenditures (PCE) price index remained static in May after a 0.3% rise in April, consistent with forecasts.
The core PCE price index, excluding volatile food and energy prices, edged up by 0.1% in May following a revised 0.3% increase in April, aligning with economists' predictions of a 0.1% rise.
Additionally, the Commerce Department reported that the annual growth rates for both the PCE price index and the core PCE price index slowed to 2.6% from 2.7% and 2.8%, respectively, as anticipated. These inflation metrics, favored by the Federal Reserve, were included in the report on personal income and spending, which revealed a slightly higher than expected increase in personal income and a marginally lower than expected rise in personal spending.
The reduced annual consumer price growth rates are likely to foster optimism about future interest rates, as Federal Reserve officials have stressed the need for stronger evidence of slowing inflation before considering rate cuts.
Anticipation of the key inflation data release today led to a lackluster stock performance on Thursday, with the major averages fluctuating near the unchanged mark. Ultimately, the major indices closed modestly higher: the Dow rose by 36.25 points or 0.1% to 39,164.06, the Nasdaq increased by 53.53 points or 0.3% to 17,858.68, and the S&P 500 gained 4.97 points or 0.1% to 5,482.87.
The choppy trading environment reflected traders' reluctance to make significant moves ahead of the crucial inflation data release.
On the U.S. economic front, a Labor Department report indicated a larger than expected decline in initial jobless claims for the week ending June 22nd. Initial claims fell to 233,000, a decrease of 6,000 from the revised 239,000 the prior week, surpassing economists' expectations of 236,000.
Furthermore, the Commerce Department reported a surprising increase in new orders for U.S. manufactured durable goods in May. Durable goods orders inched up by 0.1% following a downwardly revised 0.2% rise in April, contrary to the anticipated 0.1% decline. Excluding transportation equipment, durable goods orders decreased by 0.1% after a 0.4% increase in April, against an expected rise of 0.2%.
Most major sectors showed minor movements, contributing to the subdued broader market performance. However, networking stocks demonstrated significant strength, with the NYSE Arca Networking Index climbing 1.3%. Likewise, computer hardware stocks performed strongly, shown by the NYSE Arca Computer Hardware Index's 1.3% gain.
Airline, gold, and software stocks also saw significant gains, although semiconductor stocks faced pressure due to a 7.1% plunge in Micron (MU) shares after the company reported better-than-expected fiscal third-quarter results but issued disappointing guidance.
**Commodity, Currency Markets**
Crude oil futures are climbing $0.39 to $82.13 a barrel after a $0.84 increase to $81.74 a barrel on Thursday. Gold futures are advancing $12.90 to $2,349.50 an ounce, following a $23.40 rise to $2,336.60 an ounce in the previous session.
In currency markets, the U.S. dollar is trading at 160.57 yen, down from 160.76 yen at the previous New York close. Against the euro, the dollar stands at $1.0701, slightly down from $1.0704 yesterday.
**Asia**
Asian stock markets rose on Friday, with the dollar maintaining near two-month highs and Treasury yields falling, as traders awaited a crucial U.S. inflation report that could influence the Federal Reserve's decision on the timing of interest rate cuts.## Asian Market Overview
Gold experienced a slight dip in Asian trading, while oil extended its gains for the third consecutive day, setting the stage for a third straight weekly rise as escalating Middle East tensions intensified concerns over potential global supply disruptions.
China's Shanghai Composite Index advanced by 0.7% to reach 2,967.40 ahead of the crucial purchasing managers index (PMI) data expected over the weekend. Hong Kong's Hang Seng Index also edged slightly higher to close at 17,718.61.
In Japan, markets saw significant gains, reversing some of the losses from the previous session. The Nikkei 225 Index rose by 0.6% to 39,583.08, buoyed by a series of data indicating a pickup in inflation in Tokyo for June, a better-than-expected rise in industrial output for May, and an unchanged jobless rate at 2.6%. The broader Topix Index climbed 0.6% to 2,809.63, achieving a 34-year high driven by gains in the technology sector.
The yen weakened to 161.27 per dollar, its lowest level since 1986, ahead of the release of the latest U.S. personal consumption expenditures price index.
South Korean stocks closed higher despite a decline in industrial output for May, attributed to ongoing decreases in consumption and investment. The Kospi Index increased by 0.5% to 2,797.82.
Australian markets recorded modest gains as rising bullion prices bolstered gold mining stocks. The benchmark S&P/ASX 200 nudged up by 0.1% to 7,767.50, while the All Ordinaries Index similarly crept up by 0.1% to 8,013.80. Suncorp saw a surge of 3.6% following Federal Treasurer Jim Chalmers' approval of ANZ's acquisition of its banking arm. Nine Entertainment's shares rose by 1.1% after announcing plans to cut up to 200 jobs as part of restructuring efforts.
## European Market Highlights
European stocks exhibited mixed performance on Friday as investors analyzed various regional data along with closely-watched U.S. inflation figures.
Recent data from the Office for National Statistics revealed that the British economy grew more than initially estimated in the first quarter. The GDP increased by 0.7% from the previous quarter, where it had contracted by 0.3%. The initial estimate of growth had been 0.6%. This growth marks the UK's exit from a technical recession, following GDP contractions in the prior two quarters.
French consumer price inflation eased in June to its lowest level in nearly three years, according to a provisional estimate from the statistical office INSEE. The consumer price index saw a year-over-year increase of 2.1% in June, down from 2.3% in May, marking the weakest inflation rate since August 2021 when prices had risen by 1.9%.
In Germany, unemployment figures rose more than expected in June, based on statistics from the Federal Labour Office.
Ahead of the upcoming parliamentary elections, the French CAC 40 Index slid by 0.8%, whereas the German DAX Index rose by 0.1% and the UK's FTSE 100 Index increased by 0.2%.
Retailers JD Sports Fashion and PUMA SE experienced declines following Nike's announcement that its sales would drop this year. Delivery Hero SE's shares also fell after the German online food delivery platform disclosed that Marie-Anne Popp will become Interim Chief Financial Officer (CFO) from July 1, 2024, succeeding Emmanuel Thomassin who resigned to pursue other opportunities.
Shares of Deutsche Beteiligungs plummeted after the company announced plans to issue convertible bonds worth 100 million euros, due in 2030, convertible into new and/or existing no-par value registered shares.
Conversely, Nokia's stock rose after the Finnish telecommunications giant announced a $2.3 billion deal to acquire Infinera, aimed at strengthening its optical networks business.
## U.S. Economic Highlights
The Commerce Department released important consumer price inflation data on Friday, which matched economists' expectations for May.
The personal consumption expenditures (PCE) price index remained unchanged in May, following a 0.3% increase in April, aligning with market expectations.
Excluding food and energy prices, the core PCE price index edged up by 0.1% in May after an upwardly revised 0.3% increase in April. Economists had anticipated a 0.1% rise, slightly lower than the originally reported 0.2% increase for April.
The Commerce Department noted that the annual growth rates for both the PCE price index and the core PCE price index slowed to 2.6% from 2.7% and 2.8%, respectively, in line with expectations.The inflation metrics preferred by the Federal Reserve were highlighted in the Commerce Department's latest report on personal income and spending.
The report revealed that personal income increased slightly more than anticipated, while personal spending grew marginally less than expected.
At 9:45 AM ET, MNI Indicators will publish its assessment of Chicago-area business activity for June. The Chicago Business Barometer is projected to increase to 40.0 from May's figure of 35.4, though a reading below 50 still signals contraction.
The University of Michigan is set to release its revised consumer sentiment index for June at 10 AM ET. The index is expected to be adjusted upwards to 65.8 from an initial 65.6, a decline from May's 67.4.
At 12 PM ET, Federal Reserve Board Governor Michelle Bowman is scheduled to speak at the Ronald Reagan Presidential Foundation and Institute Leadership Council Conference.
At 12:40 PM ET, San Francisco Federal Reserve President Mary Daly will address the impact of artificial intelligence on business and the workforce during the Aspen Ideas Festival's “Navigating Tomorrow's Economy” session.
