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European stocks rise, while U.S. equity futures remain flat

European stocks rise

The Stoxx Europe 600 index advanced 0.3%, while the DAX was flat, the CAC 40 added 0.4%, and the FTSE 100 gained 0.5%

European stocks rose on Friday, with U.S. equity futures flat as investors parsed stronger-than-expected inflation in the U.S. and a European Central Bank (ECB) meeting a day prior.

Investors will also be keeping an eye on the G7 meeting of leaders in Cornwall, England on Friday.

The Stoxx Europe 600 index, up 0.4% for the week so far, advanced 0.3%, while the German DAX was flat, the French CAC 40 added 0.4%, and the FTSE 100 gained 0.5%.

U.S. stock futures were largely unchanged, following a positive day on Wall Street, with the S&P 500 logging a record finish as investors brushed aside data showing annual U.S. consumer prices jumped 5% in May to a 13-year high.

Markets have been concerned that signs of rising inflation globally will push central banks to tighten ultra-easy monetary policies and stimulus enacted to fight the pandemic fallout. But the Federal Reserve has maintained that it sees price pressures as transitory and markets continue to believe that, said Jeffrey Halley, senior market analyst at OANDA, in a note to clients.

The inflation data needed to either fall dramatically or print much higher than last month to move the needle. In the end, it came in at no man’s land levels triggering a reversion to the mean behaviourally for financial markets, Halley said. The Federal Open Market Committee meets next week, but no change in policy is expected.

Meanwhile, the ECB on Thursday left interest rates unchanged and made no tweaks to the size of its asset-buying programs at its policy meeting.

On the data front, the U.K. economy expanded 2.3% in April, its fastest monthly pace since July 2020, the Office for National Statistics (ONS) said.

Yields continued to drop in U.S. and Europe, with that of the German 10-year bond down 1 basis point to -0.268%, and the 10-year U.S. Treasury bond yield down 3 basis points to 1.437%, hovering at a three-year low.

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