Global stock markets mixed as investors await Fed's next interest rate decision

Recent debt ceiling deal and positive economic data have lifted hopes that the Fed will pause its rate increase programme next week

The Federal Reserve building in Washington. Wall Street ended higher on Friday on growing optimism that the Fed will finally hit the brakes on raising interest rates. Bloomberg

Global stock markets ended the week mixed, with investors keeping an eye on the US Federal Reserve's interest rate decision scheduled for next week.

Wall Street, in particular, rose at the close of trading on Friday on growing optimism that the Fed will finally hit the brakes on raising interest rates, which it has done so for 10 consecutive times stretching to 2022.

The recent debt ceiling deal in the US and positive economic data have lifted hopes that the Fed will pause its rate increase programme next week.

The S&P 500 settled 0.1 per cent higher, sustaining its momentum on Thursday when it closed above the key 4,200 level, up 20 per cent from its finishing low on October 12, to officially enter a new bull market.

A bull market occurs when a range of factors, such as positive investor sentiment, company results and economic data, combine to push up a bourse by 20 per cent or more above its most recent trough.

The S&P 500 also extended its winning streak to four weeks, the longest since a stretch spanning from July to August last year.

The Dow Jones Industrial Average ended 0.13 per cent higher, while the tech-heavy Nasdaq Composite added 0.2 per cent, posting its seventh straight week of gains. The indices entered their own bull markets in November and May, respectively.

For the week, the S&P 500 rose 0.4 per cent, the Dow added 0.3 per cent and the Nasdaq gained 0.1 per cent. Year-to-date, the indices have increased 12 per cent, 2.2 per cent and 26.7 per cent, respectively.

Jobless claims in the US rose 28,000 to a seasonally adjusted 261,000 for the week ended June 3, the highest level since October 2021, the Labour Department reported.

"We need the US jobs market to give up some strength so that the Fed could stop hiking the rates; otherwise, the major central banks will continue hiking pitilessly and that means chaos for the world economy in the coming months," Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, wrote in a note to clients.

We need the US jobs market to give up some strength so that the Fed could stop hiking the rates; otherwise, the major central banks will continue hiking pitilessly

Ipek Ozkardeskaya,
senior analyst at Swissquote Bank

In Europe, major stock settled lower. London's FTSE lost 0.5 per cent, dragged by the chemicals sector, which declined 7.7 per cent for its worst daily showing in more than three years.

That was the benchmark's third consecutive week of losses, having also been weighed down by concerns on higher interest rates.

Frankfurt's DAX shed 0.3 per cent, while Paris'CAC 40 inched down 0.1 per cent at the close.

Earlier in Asia, major indices gained, led by Tokyo's Nikkei, which added 2 per cent at the close, as it took cues from Wall Street's positive performance.

Hong Kong's Hang Seng rose 0.5 per cent, while the Shanghai Composite added 0.6 per cent.

In commodities, oil prices ended lower on Friday and posted a second week of losses on demand concerns and a report that the US and Iran were close to reaching an interim nuclear deal.

Brent slid 1.54 per cent, or $1.17, to settle at $74.79 a barrel, while West Texas Intermediate closed down 1.57 per cent, or $1.12, to $70.17 a barrel.

"Oil prices continued to trade in a range as economic uncertainty remained. Chinese data appeared weaker than expected, threatening demand forecasts. Crude prices could see some volatility as a result in the run-up to the Federal Reserve’s meeting," George Pavel, general manager of Capex.com Middle East, wrote in a note.

Gold, meanwhile, inched down below 0.1 per cent, or $1.40, to settle at $1,977.20 an ounce, but posted its best weekly in gain in five weeks.