USA

Stocks moved higher in the first notably broad advance since mid-April. The Dow Jones Industrial Average, S&P 500 Index, and technology-heavy Nasdaq Composite moved to record intraday highs, but the biggest advance was notched by the small-cap Russell 2000 Index, which gained 6.00%, marking its best week since early November. As measured by various Russell indexes, value stocks also handily outperformed growth stocks.

The unofficial start of earnings season kicked off Friday, with second-quarter earnings releases from JPMorgan Chase, Wells Fargo, and Citigroup. Shares of all three fell at the open of trading, with JPMorgan and Wells Fargo both missing estimates and the latter cutting its outlook.

A major factor supporting many stocks—if not the price-weighted benchmarks—appeared to be Thursday’s release of the Labor Department’s consumer price index (CPI). Headline prices fell 0.1% in June, marking the first decline since soon after the start of pandemic lockdowns in May 2020.

Europe

STOXX Europe 600 Index ended the week 1.45% higher as investors welcomed lower-than-expected U.S. inflation data. Major stock indexes rose as well. France’s CAC 40 Index added 0.63%, Italy’s FTSE MIB put on 1.74%, and Germany’s DAX gained 1.48%. The UK’s FTSE 100 Index advanced 0.60%.

French and German sovereign bond yields were lower across the curve, falling in sympathy with U.S. Treasury yields after U.S. inflation slowed more than expected. UK gilt yields fell across most of the curve but ticked up at the very front end as economic growth in May surprised to the upside, stoking uncertainty about whether the Bank of England (BoE) would ease monetary policy.

Japan

Japanese stocks retreated at the end of the week from the record highs they reached on Thursday amid heightened speculation that the authorities intervened in the foreign exchange markets to support the Japanese yen.

The speculation was triggered by a surge in the value of the yen against the U.S. dollar and was reinforced by a Nikkei report that the Bank of Japan (BoJ) conducted rate checks with banks on the euro-yen currency cross on Friday after the yen rose. A stronger yen hurts the profit outlook for Japan’s export-focused industries and makes Japanese assets more expensive for foreign investors.

The yield on 10-year Japanese government bonds (JGBs) eased to around 1.05%, a two-week low, as investors assessed the outlook for monetary policy after the sharp rebound in the yen.

China

Chinese stocks gained as strong export data offset concerns about deflationary pressures. The Shanghai Composite Index rose 0.72% while the blue chip CSI 300 added 1.2%. In Hong Kong, the benchmark Hang Seng Index was up 2.77%