Investors hoping the US Federal Reserve will finally take a breather from its long-running campaign of interest rate hikes have been left feeling a little more confident this week after data showed US inflation on both a consumer and wholesale level continued to ease in April.
Their hopes were given a further boost on Thursday by news that jobless claims last week hit their highest since October 2021, suggesting the labour market was showing some slack.
The Fed has long said it needed to see a softening in employment as well as a drop in inflation before it could consider ending its rate hike drive and look at a potential cut in borrowing costs.
"US economic data... continued the theme of tentative signs of a softening labour market and room for optimism about the inflation outlook," said National Australia Bank's Taylor Nugent.
Major European markets finished up on Friday, capping off a week where global stocks have oscillated. But Wall Street stocks fell into negative territory after climbing at the open.
This followed a warning of a "significant risk" that the United States could default on its debts by June 15 if lawmakers fail to agree a deal to raise current limits on government spending.
The updated Congressional Budget Office forecast also brings forward from July to June the so-called "X-date" -- when the US will run out of money to pay for existing financial obligations.
This adds pressure on Democrat and Republican leaders to find common ground on raising the US spending cap.
Much-anticipated debt-ceiling talks between President Joe Biden and Republican leaders have been postponed until next week, with sources saying staff-level discussions were progressing.
"It is good to know that talks are happening but in this matter, talk is cheap," said Patrick O'Hare, analyst at Briefing.com.
"It is action to raise the debt ceiling that is required and until that action happens, risk tolerance will be reined in."
- US-China meeting -
Focus across the Atlantic was also on some positive news out of Washington -- US National Security Advisor Jake Sullivan and top Chinese diplomat Wang Yi met in Vienna this week, as the superpowers seek to temper tensions over a number of issues, particularly Taiwan.
The eight hours of talks also covered Russia's invasion of Ukraine and capped an unofficial pause in high-level contact since the United States shot down a Chinese surveillance balloon earlier in the year.
Both sides described the face-to-face as "candid, substantive and constructive".
US-listed Chinese firms performed well in New York on Thursday, and a tech rally continued in Hong Kong on Friday.
But they were unable to help the city's Hang Seng Index maintain early gains, with losses also in Shanghai, Seoul, Singapore, Manila, Bangkok, Jakarta and Taipei.
European luxury stocks were given a boost after bumper results from Cartier owner Richemont, which said sales for the financial year jumped 19 percent to a forecast-beating 19.9 billion euros ($21.7 billion).
The group said it had been boosted by US and Middle Eastern tourists returning to Europe, and sounded a positive note on future growth from China's reopening.
London's FTSE 100 index rose as official data showed the UK economy had eked out growth over the first quarter, although output contracted in March as the country continues to be hit by sky-high inflation and strikes over pay.
"The UK economy squeezed out a tiny amount of growth in the first quarter but it didn't end it in a promising way," said Craig Erlam, senior market analyst at OANDA trading platform.
"While that may have been driven in part by strike action, the fact that the economy is basically flatlining means it won't take much to tip it into contraction or even recession."
- Key figures around 1540 GMT -
New York - Dow: DOWN 0.3 percent at 33,222.34 points
EURO STOXX 50: UP 0.1 percent at 4,314.90
London - FTSE 100: UP 0.3 percent at 7,754.62 (close)
Frankfurt - DAX: UP 0.5 percent at 15,913.82 (close)
Paris - CAC 40: UP 0.5 percent at 7,414.85 (close)
Tokyo - Nikkei 225: UP 0.9 percent at 29,388.30 (close)
Hong Kong - Hang Seng Index: DOWN 0.6 percent at 19,627.24 (close)
Shanghai - Composite: DOWN 1.1 percent at 3,272.36 (close)
Euro/dollar: DOWN at $1.0861 from $1.0918 on Thursday
Pound/dollar: DOWN at $1.2466 from $1.2514
Dollar/yen: UP at 135.42 yen from 134.55 yen
Euro/pound: DOWN at 87.13 pence from 87.22 pence
Brent North Sea crude: UP 0.2 percent at $75.14 per barrel
West Texas Intermediate: UP 0.3 percent at $71.04 per barrel
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