European stocks up despite recession warnings, US shares extend rally

Global stocks mostly ended higher on Friday as slower US inflation and an easing of Covid restrictions in China boosted investor sentiment, despite prospects of a downturn, AFP reported.

Frankfurt and Paris managed to advance by more than half a percent by the end of trading, although gains were capped as the European Union warned that the eurozone was set to fall into recession this winter.

US stocks also ended higher, extending Thursday’s rally after closely-watched government data showed annual inflation in the world’s biggest economy had eased slightly — dimming expectations of more aggressive interest rate hikes from the Federal Reserve.

Oil prices picked up as well following China’s announcement that it would relax some of its hardline Covid-19 restrictions, including shortening its quarantine requirements for international travelers by two days.

The dollar slumped against rival currencies following the inflation data release, at one point reaching a three-month low against the euro and weakening against the yen and pound.

London’s benchmark FTSE 100 index ended in the red after official data indicated that the UK economy was probably at the start of a prolonged recession.

“The FTSE’s struggles suggest UK investors are more worried about deteriorating domestic, eurozone and global economies than (they) are hopeful about the US and other central banks easing rate hikes,” noted Fawad Razaqzada, market analyst at City Index trading group.

In the UK, inflation is seen rising further. Currently at 10.1 percent, the Bank of England is forecasting it will hit around 11 percent this year before starting to cool.