Chris Prentice and Huw Jones
NEW YORK/LONDON (Reuters) – Global shares rose, with the S&P 500 breaking 5,000 on Friday as U.S. inflation data fueled expectations that the Federal Reserve will cut interest rates this year while closely monitored the rise in US Treasury yields.
The US dollar pared earlier gains but was still on track for a fourth weekly gain.
Oil is headed for a weekly gain on concerns about the widening conflict in the Middle East after Israel rejected a Hamas ceasefire offer.
The MSCI All Country index was up 0.35% by 2:11 pm EST (1911 GMT).
Sentiment in equity markets was supported by Wall Street, where the index rose above 5,000 for the first time, helped by strong gains in large-cap stocks such as Nvidia (NASDAQ:).
The chipmaker rose to a record high after Reuters reported it was building a new business unit.
“A close above this closely watched level will undoubtedly generate headlines and further increase fear of missing out (FOMO),” said Adam Turnquist, chief technical strategist at LPL Financial (NASDAQ:) in Charlotte, North Carolina.
“In addition to potentially boosting sentiment, round numbers such as 5000 often provide a psychological area of support or resistance for the market. “Researchers often call them ‘cognitive shortcuts,’ which create a bias toward round numbers.”
Monthly U.S. consumer prices rose less than initially expected in December, but core inflation remained slightly warm, data showed on Friday. The data revision did little to change expectations for central bank rates.
US inflation data for January will also be released next week.
It fell 58.99 points, or 0.15%, to 38,667.34; The S&P 500 added 23.78 points, or 0.48%, to 5,021.69; and gained 184.15 points, or 1.17%, to 15,977.87.
The yield on the benchmark 10-year U.S. note rose 1.1 basis points to 4.181% from 4.17% late Thursday.
Two-year yields, which typically move in lockstep with interest rate expectations, rose 2.8 basis points to 4.4841% from 4.456% late Thursday.
Gold prices were weighed down by higher Treasury yields, which fell 0.41% to $2,024.75 an ounce. The US closed down 0.4% to $2,038.7.
added 0.6% to $76.68 per barrel and rose to $82 per barrel on the day.
European shares closed slightly lower, weighed down by rising yields and falling L’Oreal shares.
The pan-European index closed 0.1% lower but still posted a weekly gain of 0.2%.
L’Oreal shares fell 7.6% after the French cosmetics company reported disappointing fourth-quarter sales growth.
Inflation in Germany, Europe’s largest economy, fell to 3.1% in January, adding fuel to bets on when the European Central Bank will start cutting interest rates.
However, euro zone bond yields hit multi-week highs after several ECB rate-setters warned against easing monetary policy too early.
“Indeed, it now seems quite clear that the ECB will wait for European wage statistics at the end of April before likely cutting rates in June,” ING bank said in a note to clients.
Japanese stocks hit 34-year high. The yen recovered from falling to a 10-week low as traders reassessed their bets on how quickly the Bank of Japan could raise rates.
In China, mainland markets were closed, while trading in Hong Kong was subdued and closed early, down 0.8% on concerns that authorities may fail to deliver on support promises.
“I’m betting (decisive action) is happening,” said Chi Lo, senior market strategist for Asia-Pacific at BNP Paribas (OTC:) Asset Management.