STOCK markets diverged yesterday as investors awaited next week’s crucial interest rate decisions from the US Federal Reserve and other central banks.

Wall Street stocks finished out a quiet week with modest gains, adding to the weekly advance.

Expectations that the Fed will hold off raising interest rates next week for the first time since starting its hiking cycle last year to combat high inflation have pushed equities higher for most of the month.

“The question on everyone’s mind is, will this good fortune for the stock market continue?” said Briefing.com analyst Patrick O’Hare.

“The answer is unknowable today since it rests in what the future brings the market in terms of economic data, earnings growth, interest rate movements, and policy action,” he added.

Asian indices closed higher but Europe’s major stock markets dipped a day after data showed that the eurozone was in recession at the start of the year.

“It hasn’t exactly been the most exciting day as far as events or data is concerned so I think it’s just been a bit of a low key session,” said market analyst Craig Erlam at the Oanda trading platform.

“What’s more, the US inflation report and Fed meeting next week may be a bit of a distraction in the short term,” he added.

Elsewhere, eyes are on China where there is growing speculation that authorities will unveil fresh stimulus measures to kickstart the world’s number-two economy, with the post-zero-Covid rally already fading.

Disappointing readings on manufacturing activity and trade this week have compounded the view that officials need to step in, with reports suggesting that the People’s Bank of China will cut interest rates soon.

Expectations were ramped up Thursday after a key government adviser said borrowing costs should come down to help struggling firms’ financing ability.

The need for action was reinforced yesterday by Chinese data showing consumer inflation essentially flat in May and wholesale prices falling more than expected.

“On the whole, the muted inflation environment may call into question the sustainability of the economic recovery, but it also provides a favourable backdrop for policymakers to roll out more policy support,” said HSBC’s Erin Xin.

Key figures around 2030 GMT

New York - Dow: UP less 0.1% at 33,876.78 (close)

New York - S&P 500: UP 0.1% at 4,298.86 (close)

New York - Nasdaq: UP 0.2% at 13,259.14 (close)

London - FTSE 100: DOWN 0.5% at 7,562.36 (close) 

Frankfurt - DAX: DOWN 0.3% at 15,949.84 (close)

Paris - CAC 40: DOWN 0.1% at 7,213.14 (close)

EURO STOXX 50: DOWN 0.2% at 4,289.79 (close)

Tokyo - Nikkei 225: UP 2.0% at 32,265.17 (close)

Hong Kong - Hang Seng Index: UP 0.5% at 19,389.95 (close)

Shanghai - Composite: UP 0.6% at 3,231.41 (close)

Euro/dollar: DOWN at US$1.0749 from US$1.0782 on Thursday

Pound/dollar: UP at US$1.2578 from US$1.2560

Dollar/yen: UP at  ¥139.41 from  ¥138.92

Euro/pound: DOWN at 85.44% from 85.84 pence

Brent North Sea crude: DOWN 1.5% at US$74.79 per barrel

West Texas Intermediate: DOWN 1.6% at US$70.17 per barrel – AFP, June 10, 2023.