San Francisco Frontiers - Stocks volatile as US inflation cools

Equities had fallen on Thursday as data showed the US economy grew a lot more in July-September than first thought, while jobless claims rose less than expected last week.

The readings suggested that despite almost a year of rate hikes and decades-high inflation, activity remained strong and the US Federal Reserve has much more work to do to rein in inflation.

The Fed has made clear it is willing to push the US economy into recession to bring inflation back down.

On Friday, the Fed's preferred inflation measure, the personal consumption expenditures (PCE) price index, rose 5.5 percent last month from November 2021, Commerce Department data showed.

That represents a decline from the annual 6.1-percent rise registered in October.

Meanwhile, personal income increased 0.4 percent month-on-month, but personal spending edged up only 0.1 percent.

"The key takeaway from the report is that real spending was flat while the inflation rates were still too high for the Fed's liking, making for an offputting stagflation mix," said market analyst Patrick O'Hare at Briefing.com.

Meanwhile, data showed US durable goods orders dropped 2.6 percent in November, but that was primarily due to a sharp decline in highly volatile aircraft orders. Excluding transportation, new orders held firm with a 0.2-percent gain.

Those pre-market reports sent Wall Street lower, but stocks rebounded after data showed a surprise jump in new home sales as well as an increase in consumer sentiment, including a key drop in inflation expectations.

"US stocks pared earlier losses as traders digest a wide range of mixed economic data that overall supports the story that inflation is coming down," said Edward Moya at OANDA trading platform.

The Dow and S&P 500 were both marginally higher in late morning trading, but the tech-heavy Nasdaq was still lower.

London posted minor gains on a shortened trading day. Meanwhile Frankfurt added 0.2 percent and Paris fell by an equal amount.

Asia's main stock markets fell after Wall Street ended well in the red on Thursday.

Tokyo's main stocks index shed one percent as Japan's inflation hit a 41-year high, reinforcing expectations that the country's central bank would lift interest rates next year.

The yen surged this week after the Bank of Japan tweaked monetary policy, in a surprise move that hinted at future rate hikes.

Hopes meanwhile that China's growth will surge as it rolls back its zero-Covid strategy have been dashed by a surge in cases across the country that has kept people at home, and battered travel and economic activity.

"The spike in Covid-19 infection rates following the easing of mobility restrictions will still constrain economic activity in the December-January time frame," said Guan Yi Low of M&G Investments.

Oil prices jumped more than three percent on supply concerns after a senior official warned Friday that Russia could cut up to seven percent of its oil production next year.

Moscow is looking to follow through on a vow not to sell crude to nations implementing an international price cap over its invasion of Ukraine.

- Key figures around 1630 GMT -

New York - UP less than 0.1 percent at 33,058.66 points

EURO STOXX 50 - DOWN 0.2 percent at 3,817.01

London - FTSE 100: UP 0.1 percent at 7,473.01 (close)

Frankfurt - DAX: UP 0.2 percent at 13,940.93 (close)

Paris - CAC 40: DOWN 0.2 percent at 6,504.90 (close)

Tokyo - Nikkei 225: DOWN 1.0 percent at 26,235.25 (close)

Hong Kong - Hang Seng Index: DOWN 0.4 percent at 19,593.06 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,045.87 (close)

Dollar/yen: UP at 132.79 yen from 132.36 yen on Thursday

Euro/dollar: UP at $1.0621 from $1.0598

Pound/dollar: UP at $1.2058 from $1.2036

Euro/pound: UP at 88.08 pence from 88.02 pence

Brent North Sea crude: UP 3.2 percent at $83.57 per barrel

West Texas Intermediate: UP 3.0 percent at $79.81 per barrel

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L.Ramos--SFF