The dollar rose and stocks around the globe rallied for a sixth straight session on Friday to post their best week in more than two years, but a US indictment over alleged Russian meddling in the 2016 presidential election cooled gains on Wall Street.
The 37-page indictment of a Russian internet agency filed by Special Counsel Robert Mueller described a conspiracy with the aim of supporting Donald Trump and sowing discord in the US political system.
Wall Street turned south on news of the indictment but soon rebounded as the fundamental story has not changed, said Ben Phillips, chief investment officer of EventShares, referring to a strong corporate earnings outlook and robust economy.
Analysts continue to underestimate the pace of global growth, which has led more companies to meet or beat analysts’ earnings expectations than in any quarter in 20 years, according to calculations earlier this week by Credit Suisse.
Fourth-quarter results for European companies in the STOXX 600 index are expected to increase 14.6 per cent from a year ago, while the blended earnings growth estimate for the S&P 500 is 15 per cent, Thomson Reuters I/B/E/S data show.
Since a market rout was sparked two weeks ago on fears of rising inflation and its impact on interest rates, a tug of war has ensued between investors seeking safety in bonds or betting a nine-year bull market in stocks is still alive.
Investors also are concerned about how the Federal Reserve will deal with still-low inflation without killing an economy and inflate asset bubbles, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston, reports Reuters.
“That’s a very difficult spot. The market recognises that challenge and is wondering how the Fed will address it,” he said.