Stock markets mixed as traders eye high interest rates for longer

NEW YORK, United States — Global stock markets diverged Friday as investors contemplated central bank signals that interest rates will remain high to combat stubborn inflation.

Wall Street stocks opened higher, but proved unable to hold onto gains amid talk of persistently elevated interest rates.

Steve Sosnick of Interactive Brokers said investor efforts to rally were "understandable" after two straight days of big declines on major US indices.

"Traders are conditioned to try to buy dips, and I think that's what they tried to do this morning," said Sosnick. "But there was really no follow through."

The broad-based S&P 500 finished at 4,320.06, down 0.2 percent for the day and 2.9 percent for the week. 

US stocks have been playing defense since the Federal Reserve's Wednesday policy decision.

While the US central bank kept interest rates unchanged, Fed officials signaled they could hike interest rates again in 2023.

The Bank of England on Thursday also decided against hiking its interest rate for a 15th time in a row, leaving it at 5.25 percent, the highest level since 2008.

"The no action is quite premature," Ipek Ozkardeskaya of Swissquote said. 

London's stock market rose Friday but the British pound dipped against the dollar.

"Whatever the Brits will import from now will cost them more than during the last months, when the pound was appreciating," Ozkardeskaya said, adding that another rate hike is likely on the horizon. 

Major eurozone indices closed lower, however, as a key survey showed eurozone economic activity shrank further in September but at a slower rate.

In Asia on Friday, the Bank of Japan stuck to its long-term program of sub-zero borrowing costs.

It comes as BoJ officials face increasing pressure to turn more hawkish as the yen weakens and after fresh data showed inflation remains stubbornly high.

Policymakers have for several months hinted that they are willing to adopt a more normalized policy, such as minor tweaks to its yield curve control scheme, which sees the bank control the band within which government bonds are allowed to move.

But there are growing calls for it to move quicker, and they will not have been tempered by data Friday showing the consumer prices -- excluding food and energy -- jumped 4.3 percent in August, a three-decade high.

Key figures around 2200 GMT 

New York - Dow: UP 0.3 percent at 33,963.84 (close)

New York - S&P 500: DOWN 0.2 percent at 4,320.06 (close)

New York - Nasdaq: DOWN 0.1 percent at 13,211.81 (close)

London - FTSE 100: UP 0.1 percent at 7,683.91 (close)

Frankfurt - DAX: DOWN 0.1 percent at 15,557.29 (close)

Paris - CAC 40: DOWN 0.4 percent at 7,184.82 (close)

EURO STOXX 50: DOWN 0.1 percent at 4,207.16 (close)

Tokyo - Nikkei 225: DOWN 0.5 percent at 32,402.41 (close)

Hong Kong - Hang Seng Index: UP 2.3 percent at 18,057.45 (close)

Shanghai - Composite: UP 1.6 percent at 3,132.43 (close)

Euro/dollar: DOWN at $1.0647 from $1.0661 on Thursday

Pound/dollar: DOWN at $1.2240 from $1.2298 

Dollar/yen: UP at 148.36 yen from 147.59 yen 

Euro/pound: UP at 86.96 pence from 86.69 pence

Brent North Sea crude: FLAT at $93.27 per barrel

West Texas Intermediate: UP 0.4 percent at $90.03 per barrel