- The threat of inflation spooked investors this week, but it wasn't enough to scuttle a rally on the global stock market.
- US consumer inflation is at a 30-year high, which could force the Federal Reserve to hike interest rates more quickly to contain prices.
- Markets are looking to see if the global inflation spurt will ease, especially as supply chain disruptions and wage hikes normalise, and businesses recover from the pandemic.
Global stock markets mostly climbed on Friday - a positive end to a week in which the threat of inflation spooked investors, but not enough to scuttle the rally.
Major US indices all gained, with the broad-based S&P 500 adding 0.7%, paring their losses for the week. But London's FTSE bucked the bullish feeling, falling 0.5%.
It was the second straight day of gains on Wall Street, amid a sense traders may have overreacted to the inflation data on Wednesday.
"Inflation is running super-hot," said Neil Wilson, chief markets analyst at Markets.com, pointing to multi-decade highs of key gauges in the United States, Japan and China.
Investors were spooked Wednesday following official US data showing annual consumer price inflation hit a 30-year high, which could force the Federal Reserve to hike interest rates more quickly to contain prices.
A survey from the University of Michigan released Friday said US consumer sentiment fell to a 10-year low amid concerns that growing inflation is undermining purchasing power.
But economists say sentiment should recover once global supply snarls are resolved, and consumers are unlikely to pull back on spending.
The inflation trend is global, and data Friday showed German wholesale prices jumped 15.2% year-on-year in October, the strongest jump since March 1974 and an acceleration from the previous two months.
"Yet investors don't seem that bothered," Wilson said. "Ultimately, the market remains fairly comfortable with fundamentals" and with central banks keeping rates low, "equities remain the only game in town."
While inflation headwinds are clearly spooking some, persistently low interest rates are leaving yield-hungry investors with few options other than to keep their faith in stocks - a scenario analysts dub TINA (there is no alternative).
"Equities can't continue to hold firm against this backdrop but in a TINA world, stranger things have happened," said Oanda analyst Craig Erlam, pointing to surging gold prices and the strengthening dollar.
Those inflation safe havens rose again on Friday, with gold up 0.2% to $1 867.70 an ounce.
"Investors turned to an old friend in time of need," Erlam said.
Markets are looking to see if the global inflation spurt will ease as supply chain disruptions and wage hikes normalise, and businesses recover from their pandemic hit.
Key figures around 22:30 GMT
New York - Dow: UP 0.5% to 36 100.31 (close)
New York - S&P 500: UP 0.7% to 4 682.85 (close)
New York - Nasdaq: UP 1.0% at 15 860.96 (close)
London - FTSE 100: DOWN 0.5% at 7 347.91 points
Frankfurt - DAX: UP 0.1% at 16 094.07 (close)
Paris - CAC 40: UP 0.5% at 7 091.40 (close)
EURO STOXX 50: UP 0.3% at 4 370.33 (close)
Tokyo - Nikkei 225: UP 1.1% at 29 609.97 (close)
Hong Kong - Hang Seng Index: UP 0.3% at 25 327.97 (close)
Shanghai - Composite: UP 0.2% at 3 539.10 (close)
Euro/dollar: DOWN at $1.145 from $1.1449 at 21:15 GMT
Pound/dollar: UP at $1.3413 from $1.3365
Dollar/yen: DOWN at 113.85 yen from 114.08 yen
Euro/pound: DOWN at 85.33 pence from 85.66 pence
Brent North Sea crude: DOWN 1.0% at $82.04 per barrel
West Texas Intermediate: DOWN 1.1% at $80.69 per barrel