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By Amanda Cooper

LONDON (Reuters) – Global shares rose for a third day on Friday, thanks to a lift from Japan’s Nikkei closing at another 34-year peak and a buoyant Wall Street, after a big fall in U.S. retail sales revived chances of a June rate cut.

This week’s data releases have added to the belief among investors that the U.S. economy at least is holding up well enough not to merit any immediate rate cuts, which has kept the dollar at its highest in three months and set gold on course for its largest weekly drop this year.

Wall Street rattled to another robust close on Thursday, after data showed a surprisingly large drop in U.S. consumer spending, which revived the chances of the Fed cutting rates by June.

The upbeat mood carried into Asia, where the Nikkei closed at its highest since 1989 and then into Europe, with the STOXX 600 hitting its highest since January 2022.

“Everyone is still in this massive ‘dip-buying mode’ that they’ve been in pretty much all year,” Michael Brown, a strategist with broker Pepperstone, said.

“Any dips are lasting 12 hours at most, before the buyers come in and just scoop it up,” he said.

U.S. futures pointed to an upbeat start to trading later in the day. Nasdaq futures were up 0.5%, while those on the S&P 500 futures gained 0.2%.

The dollar recovered some poise after a swift sell-off on Thursday to trade 0.2% higher against the yen, which has been wallowing at its weakest since November at levels that have been typically seen as potential catalysts for official intervention.

Bank of Japan Governor Kazuo Ueda said on Friday that monetary policy would most likely remain accommodative, even after ending negative interest rates, echoing recent reassurances from BOJ officials that have weighed on the yen.

“The dollar/yen has sort of consolidated around the 150 level, so that’s providing support (to Nikkei). There’s the corporate reform still going through, so the exporters will continue to do well,” said Tony Sycamore, market analyst at IG.

WEAK DATA, STRONG CONFIDENCE

Figures on Thursday showed that Japan and Britain slipped into recession at the end of last year, and U.S. retail sales last month fell much more than expected. But the upshot of that could be relatively looser monetary policy.

“I think the demand picture is certainly starting to fracture in some of the developed market economies,” said Sycamore. “So it does bring forward the idea of rate cuts.”

Overnight, data showed U.S. retail sales fell by 0.8% in January, the sharpest drop in 10 months. Meanwhile, UK data on Friday showed a big improvement in retail sales in January, but this did little to prop up the pound.

Markets moved to fully price in a rate cut from the Fed in June, reversing some of the price action after a stronger-than-expected U.S. inflation report prompted traders to give up bets for early rate relief.

Treasury yields edged up after an overnight dip. The yield on benchmark 10-year notes rose 2 basis points to 4.264% ahead of producer price data later in the day.

With the dollar in the ascendant, gold has been under pressure this week. The spot price is heading for a weekly fall of nearly 1%, its biggest weekly decline since late December.

Gold, which has traded consistently above $2,000 an ounce for most of the past two months, was flat at $2,005.

Oil prices fell on Friday after jumping the previous session. The International Energy Agency on Thursday flagged slowing demand growth this year.

Brent crude eased 0.9% to $82.11 a barrel, while U.S. futures fell 0.7% to $77.43.

(Additional reporting by Stella Qiu in Sydney. Editing by Sam Holmes, Gerry Doyle and Nick Macfie.)

By Alex Lawler

LONDON (Reuters) -Oil slipped on Friday as a forecast of slowing demand by the International Energy Agency offset support from geopolitical tensions and hopes that the U.S. Federal Reserve might cut interest rates sooner than expected.

Weighing on sentiment, the IEA said on Thursday that global oil demand growth was losing momentum and it trimmed its 2024 growth forecast, in contrast to the view held by the Organization of the Petroleum Exporting Countries (OPEC).

“There was a tentative attempt to recover yesterday morning, but hopes were shattered after the IEA published its updated supply-demand outlook,” said Tamas Varga of oil broker PVM.

Brent crude futures were down 53 cents, or 0.6%, at $82.33 a barrel at 0915 GMT. U.S. West Texas Intermediate crude futures fell 33 cents to $77.70.

Both contracts climbed over 1% on Thursday as a larger-than-expected drop in U.S. retail sales prompted hopes the Federal Reserve will soon start cutting interest rates, which could be positive for oil demand.

“Hopes for U.S. rate cuts provided support on Thursday, but investors are now adjusting their positions ahead of a long weekend in the U.S.,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

Tension in the Middle East provided continued support, with analysts saying the risk of a wider Middle East conflict could continue to guide crude prices.

Israeli forces said on Thursday they had raided the biggest functioning hospital in Gaza, while Hezbollah said it fired dozens of rockets at a northern Israeli town in a “preliminary response” to the killing of 10 civilians in southern Lebanon, the deadliest day for Lebanese civilians in four months of cross-border hostilities.

“I would expect the latest gains from an increased Mideast risk premium to stick, especially going into the weekend,” said Vandana Hari, founder of oil markets analysis provider Vanda Insights.

(Additional reporting by Mohi Narayan in New Delhi and Yuka Obayashi in Tokyo; Editing by Susan Fenton)

By Brigid Riley

TOKYO (Reuters) -Japan’s benchmark Nikkei rallied to 34-year highs on Friday and was on the cusp of eclipsing the all-time peak reached during the hey days of the nation’s bubble economy in the 1980s. The index blew past the post-economic bubble era record of 38,188.74, putting it on course to surpass the life-time peak of 38,957.44 reached in December 1989. The Nikkei share average finished the day up 0.86% at 38,487.24. So far, the index is up 14.0% for the year.

“The speed (at which the Nikkei is rising) is faster than I had expected, but I think it’s justified” given fundamental improvements such as corporate governance reform, said Kenji Abe, an analyst at Daiwa Securities.

Of the index’s 225 constituents, 190 advanced and just 34 declined.

The broader Topix closed up 1.27% at 2624.73.

Japan’s stock market was buoyed by a strong day on Wall Street overnight, with the Nikkei index’s heavyweights climbing.

Toyota Motor gained 0.95%, Fast Retailing was up 1.08% and Recruit Holdings rallied 4.0%.

Semiconductor equipment manufacturer Tokyo Electron, which had been in negative territory for a while, also picked up during the day, eking out a modest 0.4% gain.

Entertainment company Bandai Namco Holdings Inc was the best performer, up 8.05% after taking a tumble the previous day.

In sectors, the oil and coal products Topix subindex rallied 3.96% to come out on top after a brief jump in oil prices overnight.

On the broader economic front, investors were assessing Thursday’s gross domestic production report showing Japan unexpectedly slipped into a recession at the end of last year, and how that will affect the Bank of Japan’s (BOJ) monetary policy outlook.

BOJ Governor Kazuo Ueda told Japan’s parliament on Friday that the central bank will examine whether to maintain its various monetary easing measures, including negative interest rates, when its 2% inflation target comes into sight.

(Reporting by Brigid RileyEditing by Shri Navaratnam)

By Stella Qiu

SYDNEY (Reuters) – Japan’s Nikkei closed at another 34-year peak on Friday, helped higher by a buoyant Wall Street, while the dollar found its footing after a big fall in U.S. retail sales revived chances of a June rate cut.

The rally in Asia is set to extend to Europe, with EUROSTOXX 50 futures up 0.5%. Nasdaq futures rose 0.2% and S&P 500 futures were flat.

The of the all-time high of 38,957 points, hit in 1989. The index is up 4.3% for the week, the third straight week of gains, bringing the year-to-date gains to a staggering 15%.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9%, helped by a 2.6% jump in Hong Kong’s Hang Seng index after returning from the Lunar New Year holidays. The index was up 1.9% for the week.

Mainland China remained closed on Friday.

Bank of Japan Governor Kazuo Ueda said on Friday that monetary policy would most likely remain accommodative, even after ending negative interest rates, echoing recent reassurances from BOJ officials that have weighed on the yen.

The yen eased 0.2% on Friday to 150.26 per dollar, back above the critical 150 level that could draw possible Japanese intervention to slow the currency’s declines.

“The dollar/yen has sort of consolidated around the 150 level, so that’s providing support (to Nikkei). There’s the corporate reform still going through, so the exporters will continue to do well,” said Tony Sycamore, market analyst at IG.

Figures on Thursday showed that Japan and Britain slipped into recession at the end of last year, and U.S. retail sales last month fell much more than expected. But the upshot of that could be relatively looser monetary policy.

“I think the demand picture is certainly starting to fracture in some of the developed market economies,” said Sycamore. “So it does bring forward the idea of rate cuts.”

Overnight, data showed the U.S. retail sales fell by 0.8% in January, the sharpest drop in 10 months.

Markets moved to fully price in a rate cut from the Federal Reserve in June, reversing some of the price action after a stronger-than-expected U.S. inflation report prompted traders to give up bets for early rate relief.

That cheered Wall Street, with the S&P 500 gaining 0.6%, the Nasdaq Composite up 0.30% and Dow Jones Industrial Average firming 0.9%.

The repositioning in interest rate expectations weighed on the dollar, but it rebounded 0.1% to 104.41 against its peers on Friday, after losing 0.4% overnight.

Treasury yields bounced after dipping overnight. The yield on benchmark 10-year notes rose 2 basis points at 4.2576%, after slipping 3 basis points overnight. It was still up 8 basis points for the week.

Traders are awaiting produce price data later in the day for more clues on Fed policy.

Oil prices were mixed on Friday after jumping the previous session. The International Energy Agency (IEA) on Thursday flagged slowing demand growth this year.

Brent eased 0.1% to $82.81, while U.S. crude edged 0.1% higher to $78.12 per barrel.

The spot gold price was flat at $2,003.09.

(Reporting by Stella Qiu. Editing by Sam Holmes and Gerry Doyle.)

By Mohi Narayan and Yuka Obayashi

NEW DELHI (Reuters) -Oil prices stalled on Friday over a forecast of slowing demand by the International Energy Agency after gaining in the previous session on weak U.S. retail sales data that sparked optimism that the Fed might cut interest rates sooner than expected.

Brent crude futures were down 9 cents, or 0.1%, to $82.77 a barrel at 0342 GMT. U.S. West Texas Intermediate crude futures rose 4 cent to $78.07 a barrel.

Both contracts climbed over 1% on Thursday as a larger-than-expected drop in U.S. retail sales prompted hopes the Federal Reserve will soon start cutting interest rates, which could be positive for oil demand.

The U.S. Commerce Department report showed retail sales dropped 0.8% in January, the biggest fall since February 2023. Economists polled by Reuters had forecast retail sales dipping 0.1%.

“Hopes for U.S. rate cuts provided support on Thursday, but investors are now adjusting their positions ahead of a long weekend in the U.S.,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, noting Feb. 19 is a U.S. holiday.

“While keeping a close eye on interest rate trends, investors will continue to assess whether geopolitical risks in the Middle East will spill over into crude supply chains,” he said, predicting WTI to trade in the $70-$80 range for a while.

Weighing on market sentiment, Paris-based International Energy Agency (IEA), the industrialised world’s energy watchdog, said on Thursday that global oil demand growth was losing momentum and trimmed its 2024 growth forecast, in sharp contrast to the view held by the Organization of the Petroleum Exporting Countries (OPEC).

The IEA’s monthly report said it expects global oil demand to grow by 1.22 million barrels per day (bpd) this year, slightly down from last month’s estimate. OPEC on Tuesday stuck to its much steeper growth forecast of 2.25 million bpd.

In the Middle East, Hezbollah said on Thursday it fired dozens of rockets at a northern Israeli town in a “preliminary response” to the killing of 10 civilians in southern Lebanon, the deadliest day for Lebanese civilians in four months of cross-border hostilities.

Meanwhile, Israeli forces said on Thursday they had raided the biggest functioning hospital in Gaza as footage showed chaos, shouting and gunfire in dark corridors filled with dust and smoke.

Analysts said the risk of a wider Middle East conflict could continue to guide crude prices.

“I would expect the latest gains from an increased Mideast risk premium to stick, especially going into the weekend,” said Vandana Hari, founder of oil markets analysis provider Vanda Insights.

“The impending Israeli offensive in Rafah has the potential to unleash a response from the Houthis, which have been a bit quiet of late in the Red Sea, and other Iran-backed militia in the region,” Hari added.

(Reporting by Mohi Narayan in New Delhi and Yuka Obayashi in Tokyo; Editing by Muralikumar Anantharaman and Miral Fahmy)

By Brigid Riley

TOKYO (Reuters) -Japan’s benchmark Nikkei got off to a roaring start on Friday, hitting 34-year highs and was on the cusp of eclipsing the all-time peak reached during the hey days of the nation’s bubble economy in the 1980s.

The index blew past the post-economic bubble era record of 38188.74, putting it on course to surpass the life-time high of 38,957.44 reached in December 1989.

The Nikkei share average relinquished some of its early gains but was still up 0.91% at 38,505.89 by the midday close. Of the index’s 225 constituents, 202 advanced while only 21 declined.

“The speed (at which the Nikkei is rising) is faster than I had expected, but I think it’s justified” given fundamental improvements such as corporate governance reform, said Kenji Abe, an analyst at Daiwa Securities.

The broader Topix was up 1.26% at 2624.53.

Japan’s stock market was buoyed by a strong day on Wall Street overnight. U.S. stocks closed higher after U.S. retail sales data declined more than expected, feeding hopes the Federal Reserve will start cutting interest rates in coming months.

Among the stocks leading the charge, entertainment company Bandai Namco Holdings Inc rebounded 7.59% after tumbling on Thursday, followed by insurance firm T&D Holdings Inc, up 6.24%, and Rakuten Group Inc gaining 5.96%.

In megacap shares, Toyota Motor gained 1.06%, Fast Retailing was up 0.94% and telecommunications services firm KDDI Corp rallied 2.37%.

A brief jump in oil prices overnight boosted related sectors, with the oil and coal products Topix subindex up 3.76%.

On the broader economic front, investors were also assessing Thursday’s gross domestic production report showing Japan unexpectedly slipped into a recession at the end of last year, and how that will affect the Bank of Japan’s (BOJ) monetary policy outlook.

BOJ chief Kazuo Ueda appearance before Japan’s parliament on Friday will be closely watched.

(Reporting by Brigid RileyEditing by Shri Navaratnam)

By Yuka Obayashi

TOKYO (Reuters) – Oil prices meandered on Friday as investors pondered slowing demand forecast by an influential group and weak U.S. retail sales data that sparked optimism about U.S. interest rate cuts.

Brent crude futures dropped 11 cents, or 0.1%, to $82.75 a barrel at 0131 GMT. U.S. West Texas Intermediate crude futures rose 1 cent to $78.04 a barrel.

Both contracts climbed over 1% on Thursday as a larger-than-expected drop in U.S. retail sales prompted hopes the Federal Reserve will soon start cutting interest rates in coming months, which could be positive for oil demand.

The U.S. Commerce Department report showed retail sales dropped 0.8% in January, the biggest fall since February 2023. Economists polled by Reuters had forecast retail sales dipping 0.1%.

“Hopes for U.S. rate cuts provided support on Thursday, but investors are now adjusting their positions ahead of a long weekend in the U.S.,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, noting Feb. 19 is a U.S. holiday.

“While keeping a close eye on interest rate trends, investors will continue to assess whether geopolitical risks in the Middle East will spill over into crude supply chains,” he said, predicting WTI to trade in the $70-$80 range for a while.

Weighing on market sentiment, Paris-based International Energy Agency (IEA), the industrialised world’s energy watchdog, said on Thursday global oil demand growth is losing momentum and trimmed its 2024 growth forecast, in sharp contrast to the view held by the Organization of the Petroleum Exporting Countries (OPEC).

The IEA’s monthly report said it expects global oil demand to grow by 1.22 million barrels per day (bpd) this year, slightly down from last month’s estimate. OPEC on Tuesday stuck to its much steeper growth forecast at 2.25 million bpd.

In the Middle East, Hezbollah said on Thursday it fired dozens of rockets at a northern Israeli town in a “preliminary response” to the killing of 10 civilians in southern Lebanon, the deadliest day for Lebanese civilians in four months of cross-border hostilities.

Meanwhile, Israeli forces said on Thursday they had raided the biggest functioning hospital in Gaza as footage showed chaos, shouting and gunfire in dark corridors filled with dust and smoke.

(Reporting by Yuka Obayashi; Editing by Muralikumar Anantharaman)

By Stella Qiu

SYDNEY (Reuters) – Japan’s Nikkei charged toward an all-time high on Friday, helped higher by a buoyant Wall Street after a big fall in U.S. retail sales revived the chance of a June rate cut, which in turn weighed on the dollar.

Nikkei surged 1.4% to 38,678 points, just within a whisker of the all-time high of 38,957 points hit in 1989 that marked the peak of Japan’s so called “bubble economy.”

The index is up 4.8% for the week, the third straight week of gains, bringing the year-to-date gains to a staggering 15.6%.

Elsewhere, Asian shares mostly tracked Wall Street higher. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3% and was headed for a 1.4% weekly gain.

Figures on Thursday showed that Japan and Britain slipped into recession at the end of last year, and U.S. retail sales last month fell much more than expected. But the upshot of that could be relatively looser monetary policy.

“I think the demand picture is certainly starting to fracture in some of the developed market economies,” said Tony Sycamore, market analyst at IG. “So it does bring forward the idea of rate cuts.”

“One by one the dominoes are starting to fall. The UK and Japan fell yesterday. Obviously there’s a long way to go for the U.S. to fall into recession because their numbers have been pretty good. Europe you know it could be the next to go. And China’s not great.”

Nomura on Thursday forecast the Nikkei would reach 40,000 points by the end of the year, citing reasons such as an end to deflation in Japan, global investment shifting away from dependence on Chinese equities and improvement in Japanese corporate governance.

Overnight, data showed the U.S. retail sales fell by 0.8% in January, the sharpest drop in 10 months, confounding expectations of a small dip of 0.1%.

Markets moved to fully price in a rate cut from the Federal Reserve in June, reversing some of the price action after a stronger-than-expected U.S. inflation report prompted traders to give up bets for early rate relief.

That cheered Wall Street with the S&P 500 gaining 0.6%, the Nasdaq Composite up 0.30% and Dow Jones Industrial Average firming 0.91%.

The repositioning in interest rate expectations weighed on the dollar, which lost 0.4% against its peers overnight and was last at 104.36. Traders are awaiting the produce price data later in the day for more clues on Fed policy.

The yen caught some respite from the dollar’s retreat and was last at 149.9 per dollar. It gained 0.4% overnight to move away from the critically watched 150 level that could invite possible Japanese intervention.

Treasuries recovered some of the losses from the hotter-than-expected CPI figures earlier in the week. The yield on benchmark 10-year notes was little changed at 4.2496%, after slipping 3 basis points overnight. It was still up 6 basis points for the week.

Two-year Treasury yields edged 2 basis points higher to 4.5930% and was up 10 basis points for the week.

Oil prices were mixed on Friday after jumping the previous session. The International Energy Agency (IEA) on Thursday flagged slowing demand growth this year.

Brent eased 0.2% to $82.73, while U.S. crude edged 0.1% lower to $77.98 per barrel.

The spot gold price was flat at $2,003.09.

(Reporting by Stella Qiu. Editing by Sam Holmes.)

WASHINGTON (Reuters) – U.S. import prices increased by the most in nearly two years in January amid rising costs for petroleum and other goods, a trend that if sustained, would be bad news in the fight against inflation.

Import prices jumped 0.8% last month, the largest gain since March 2022, after a revised 0.7% decline in December, the Labor Department’s Bureau of Labor Statistics said on Thursday. Import prices were previously reported to have been unchanged in December. Economists polled by Reuters had forecast import prices, which exclude tariffs, would be unchanged in January.

In the 12 months through January, import prices fell 1.3% after decreasing 2.4% in December. Annual import prices have now dropped for 12 consecutive months, though the pace of decline is slowing. Government data this week showed that consumer prices picked up in January, driven by higher rental costs as well as price increases at the start of the year.

Financial markets have pushed back their interest rate-cut expectations to June from May. Since March 2022, the Federal Reserve has raised its policy rate by 525 basis points to the current 5.25%-5.50% range.

Imported fuel prices rebounded 1.2% in January. That followed a 7.7% plunge in December. The cost of imported food surged 1.5% after dipping 0.1% in the prior month.

Excluding fuels and food, import prices rose 0.7% after being unchanged in December. These so-called core import prices fell 0.6% on a year-on-year basis in January.

Prices for imported capital goods rose 0.4% last month after slipping 0.1% in December. The cost of motor vehicles, parts and engines jumped 0.8% after rising 0.1% in the prior month.

Consumer goods excluding automotives soared 1.1%. Prices of goods imported from China fell 0.3%. They dropped 2.9% on a year-on-year basis in January.

The report also showed export prices rebounded 0.8% after declining 0.7% in December. Export prices fell 2.4% on a year-on-year basis in January after decreasing 2.9% in December.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

By Caroline Valetkevitch

NEW YORK (Reuters) -Global stock indexes advanced, Treasury yields declined and the dollar weakened against the Japanese yen on Thursday after a larger-than-expected drop in U.S. retail sales in January prompted a slight repositioning of expectations for interest rate cuts.

The U.S. Commerce Department report showed retail sales dropped 0.8% last month, the biggest fall since February 2023. Economists polled by Reuters had forecast retail sales dipping 0.1%.

However, winter storms were seen as possible factors affecting the data, with economists noting that a fairly healthy labor market remains supportive for consumer spending.

A separate report showed initial jobless claims fell 8,000 to a seasonally adjusted 212,000 for the week ended Feb. 10, slightly below the 220,000 estimate.

Investors are closely watching economic data for clues on when the Federal Reserve might begin cutting rates.

Bets for an at least 25-basis-point rate cut in May edged up to 40.6%, while odds for June stood at 82%, according to the CME Group’s FedWatch Tool.

A warmer reading of U.S. consumer prices earlier this week prompted traders to cut the chances of a prompt rate cut from the Fed, which lifted the dollar and sparked a sell-off in the fixed income market.

Traders also are once again watching the dollar/yen rate as it topped 150 in the last few days, a critical level that puts the market on alert for possible Japanese intervention to weaken its currency.

The yen strengthened despite unexpectedly weak Japanese gross domestic product figures for the fourth quarter of 2023, which saw the country overtaken by Germany as the world’s third-largest economy.

Against the Japanese yen, the dollar was down 0.41% at 149.94. The dollar index fell 0.38% at 104.28, with the euro up 0.4% at 1.0768.

The yield on the benchmark U.S. 10-year Treasury note fell 3 basis points to 4.234% and was on track for a second straight decline following a jump on Tuesday after the consumer prices reading.

“Clearly the retail sales came in somewhat below expectations and fits with our narrative that this is going to be a slower growth environment as we traverse 2024, but one where we still expect that there will be persistent economic growth, meaning that our base case is avoiding a recession in mid-2024,” said Bill Northey, senior investment director at U.S. Bank Wealth Management in Billings, Montana.

The Dow Jones Industrial Average rose 348.85 points, or 0.91%, to 38,773.12, the S&P 500 gained 29.11 points, or 0.58%, to 5,029.73 and the Nasdaq Composite gained 47.03 points, or 0.30%, to 15,906.17.

MSCI’s gauge of stocks across the globe rose 5.85 points, or 0.79%, to 750.80. The STOXX 600 index gained 0.68%.

Earlier on Thursday, Japan’s Nikkei rallied to its highest level in 34 years, and the stock index now sits just 800 points below its all-time high in 1989 that marked the peak of Japan’s so called “bubble economy.”

Oil prices rose as the U.S. retail data prompted a sell-off in the dollar. U.S. crude gained $1.39 to settle at $78.03 a barrel and Brent rose $1.26 to settle at $82.86. Spot gold was up 0.6% at $2,004.05 per ounce.

(Reporting by Caroline Valetkevitch; additional reporting by Amanda Cooper in London, Ankur Banerjee in Singapore and Chuck Mikolajczak in New York; Editing by Jacqueline Wong, Tomasz Janowski, Susan Fenton and Sandra Maler)