San Francisco Frontiers - Stocks advance as traders eye further US rate hike

Rising oil prices added to concerns that central banks will feel under pressure to hike rates further to push inflation down.

The rise comes at the end of a week that saw a sell-off as various indicators suggested the US economy was in good health but the battle against inflation was still far from won.

The economies of China and Europe however, are struggling.

"Investors are currently caught between two distinct pincers: concerns over slowing economic numbers, particularly in Europe and China, against a backdrop of much stickier inflation caused by rising energy prices," said Michael Hewson at CMC Markets.

Strong US readings -- including on the services sector and jobs -- and a surge in oil prices have sparked fears the Fed will announce one more hike before the end of the year or keep borrowing costs elevated for an extended period, risking a recession.

Those worries were compounded by Thursday's news that US jobs claims last week had come in below forecasts.

"This has put some doubts over the narrative that the US labour market tightness is easing," said market analyst Fawad Razaqzada at City Index.

"Correspondingly, traders have pushed their expectations of the first rate cut from the Fed further out in 2024."

The Fed's monetary policy committee next meets later this month. The European Central Bank, which has also hiked rates, will hold its own meeting next week.

- Concern over China -

Meanwhile, Chinese data out this week showed continued weakness.

The United States is "carefully" monitoring China's challenges, US Treasury Secretary Janet Yellen said Friday, as the slowdown in the world's second largest economy raises concerns for global growth.

"China faces a variety of both short and longer term global challenges, economic challenges that we've been monitoring carefully," Yellen told reporters in New Delhi, ahead of a two-day G20 summit.

Asian markets slid Friday, one day after Wall Street was hit by a sharp drop in Apple's share price following a report that China was banning government departments from using iPhones.

After starting the day in the red, European stocks pulled into positive territory during afternoon trading and closed higher.

Wall Street opened flat and then pushed higher.

Elsewhere Friday, European natural gas prices rallied as much as 12.6 percent as workers launched rolling strikes at Chevron's gas plants in Western Australia, threatening a major production pipeline that pumps out five percent of global liquefied natural gas (LNG) stocks.

"Australia is a major exporter of LNG and the market is tight, which is why we’re seeing such sensitivity to the strike action," said Craig Erlam at OANDA trading platform.

European nations have been importing considerably more LNG to replace reduced Russian supplies that were delivered by pipeline before the war in Ukraine.

"The coming days could be crucial and therefore extremely volatile," added Erlam.

Oil futures also climbed, continuing to win support from a decision by key producers Saudi Arabia and Russia to extend output cuts until the end of 2023.

- Key figures around 1530 GMT -

New York - Dow: UP 0.3 percent at 34,616.20 points

London - FTSE 100: UP 0.5 percent at 7,478.19

Frankfurt - DAX: UP 0.1 percent at 15,740.30

Paris - CAC 40: UP 0.6 percent at 7,240.77

EURO STOXX 50: UP 0.4 percent at 4,237.19

Tokyo - Nikkei 225: DOWN 1.2 percent at 32,606.84 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,116.72 (close)

Hong Kong - Hang Seng Index: Closed for a storm

Euro/dollar: UP at $1.0714 from $1.0701 on Thursday

Pound/dollar: UP at $1.2476 from $1.2474

Dollar/yen: UP at 147.66 yen from 147.25 yen

Euro/pound: UP at 85.88 from 85.76 pence

Brent North Sea crude: UP 1.0 percent at $90.85 per barrel

West Texas Intermediate: UP 1.0 percent at $87.71 per barrel

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E.Jones--SFF