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Global stocks fall, US dollar climbs on inflation worries

NEW YORK :Global equity markets dipped on Friday, while the U.S. dollar gained as rising consumer prices bolstered expectations of interest rate hikes even with data showing solid growth in U.S. consumer spending.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.6per cent in September, the Commerce Department said on Friday, signifying strong consumer confidence as COVID-19 infections fall.

But the data also showed that price pressures remained persistent in September, with the personal consumption expenditures (PCE) price index climbing 0.2per cent.

Investors overcame bearish sentiment that had weighed on trading following quarterly earnings from technology giants Amazon Inc and Apple Inc on Thursday that both missed Wall Street predictions owing to increased labor costs and operational disruptions that were set to hit their revenues.

"The inflation story slowly morphed into something that we thought to be transitory, and it's turning out to be more persistent," said Charlie Ripley, senior investment strategist at Allianz Investment Management in Minnesota.

The MSCI world equities index, which tracks shares in 50 countries, dipped 0.25per cent to 745.08. European stocks closed 0.07per cent higher at 475.51 after rebounding from losses early in the day's session.

On Wall Street, all three major indexes closed higher after trading down for much of the day's session, driven by technology, healthcare, and consumer discretionary stocks.

Microsoft's shares touched a record high and neared a market capitalization of US$2.5 trillion, surpassing Apple's market cap of roughly US$2.46 trillion.

The Dow Jones Industrial Average rose 0.25per cent to 35,819.56, the S&P 500 gained 0.19per cent to 4,605.38 and the Nasdaq Composite added 0.33per cent to 15,498.39.

"When you look at the bigger picture in equities, the price makers in an inflation environment can pass it to consumers, but price takers have to absorb those input costs, meaning lower profits," Ripley added.

U.S. Treasury yields dipped from earlier gains, dragged down by concerns over rising consumer inflation for September that further stoked expectations of aggressive monetary policy action from the Federal Reserve to combat the surge in prices.

The benchmark U.S. 10-year yield traded down at 1.5539per cent.

The dollar index continued to rebound from prior-day losses on news that the Fed's preferred inflation measure showed prices continuing to rise faster than its 2per cent target.

The dollar index rose 0.811per cent, with the euro down 1.03per cent to US$1.1559.

U.S. crude prices settled higher, turning positive after an early decline, supported by expectations that the Organization of the Petroleum Exporting Countries, Russia and their allies, known as OPEC+, would maintain production cuts.

Brent crude rose 6 cents to settle at US$84.38, while U.S. West Texas Intermediate crude rose 76 cents, or 0.9per cent, to US$83.57.

Gold prices fell to their lowest level in more than a week on Friday, weighed down by a stronger dollar and rising U.S. inflation.[

Spot gold dropped 0.9per cent to US$1,782.39 an ounce. U.S. gold futures fell 1.30per cent to US$1,783.00 an ounce.

(Reporting by Chibuike Oguh in New York; editing by Jonathan Oatis)

Source: Reuters

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