AMSTERDAM -- World stock markets shrugged off suggestions the U.S. Federal Reserve may begin to reverse some of its asset purchase programs by the end of the summer, and were mostly higher Friday.
John Williams, head of the Federal Reserve’s San Francisco branch, sparked a minor sell-off on U.S. markets late Thursday by saying the housing market is recovering and the Fed should consider ending purchases of mortgage-linked bonds.
At one time, evidence of a recovering U.S. economy would have a positive effect on financial markets. But at the moment investors believe the current rally has been mostly driven by easy monetary policy. So an end to it would hurt stocks.
"Such suggestions are not to be taken lightly and it is hard to believe that equities will not experience a ‘realignment’ of sorts once the Fed does finally start to close the spigot," said analysts from Charles Stanley in a note.
Jane Foley of Rabobank agreed, but said Williams’ remarks should be taken in context.
"Yesterday’s housing data were weak." She said. "Initial claims and output data have also disappointed this week, meaning that there is reason for the Fed doves to remain in control" of policy.
Britain’s FTSE 100 rose 0.3 percent to 6,704.57. Germany’s DAX climbed the same amount to 8,392.18. France’s CAC-40 was up 0.2 percent to 3,986.56.
Wall Street appeared ready to recoup Thursday’s losses: Dow Jones industrial futures rose 47 points to 15,233 and S&P 500 futures rose 5.25 points to 1,650.
The key event expected Friday is the release of the Conference Board’s U.S. index of leading indicators for April, due after North American markets open.
Analysts hope the figures will balance out several discouraging economic reports released Thursday, including a jump in unemployment aid applications to their highest level in six weeks.
Earlier in Asia, Japan’s Nikkei 225 index rose 0.7 percent to close at 15,138.12, reversing a lower open. Australia’s S&P/ASX 200 added 0.3 percent to 5,180.80, pushed up by gains in BHP Billiton, the world’s largest mining company. The stock rose 1.9 percent on bargain-hunting.
Benchmarks in mainland China and Indonesia also rose while those in Taiwan, India, Singapore, New Zealand and the Philippines fell. Markets in Hong Kong and South Korea were closed for public holidays.
Evan Lucas of IG Markets in Melbourne attributed the declining markets to investors booking profits following strong rallies. Japan’s benchmark Nikkei 225 index has returned 45 percent so far this year. The Standard & Poor’s 500 is up 16 percent.
"There is always an uneasy feeling underlying the markets when they start making all-time highs," Lucas said.
Corporate earnings, which have been helping to power Wall Street to all-time highs, took a step back on Thursday after Wal-Mart, the world’s largest retailer, reported a disappointing first-quarter profit and acknowledged a sales slump. Personal computer maker Dell posted dismal first-quarter earnings.
Benchmark oil for June delivery rose 37 cents per barrel, or 0.4 percent, to $95.53 in electronic trading on the New York Mercantile Exchange.
In currencies, the euro fell to $1.2866 from $1.2907 late Thursday in New York. The dollar rose to 102.44 yen from 102.06 yen.