US equities benefit from better than expected data

US equities surged on Friday, bringing a positive end to a seemingly disappointing week, as strong retail sales data and a survey hinting at easing inflation expectations tempered concerns over the economic outlook.

Ealier on the day, Europe’s Stoxx 600 equity index closed 1.8 per cent higher. The S&P 500 share index was up 1.7 per cent by mid-afternoon in New York, but remained on track for a weekly loss of more than 1 per cent. The technology-focused Nasdaq Composite gained 1.6 per cent.

Friday’s data showed US retail sales rose 1 per cent month on month in June, exceeding economists’ forecasts for a 0.8 per cent gain. Separately, the University of Michigan’s closely watched consumer sentiment index indicated that medium-term inflation expectations had dropped to a one-year low of 2.8 per cent.

Markets in recent months have been gripped by debate over whether the US economy is strong enough to withstand aggressive rate rises by the Federal Reserve in response to red-hot inflation, after downbeat business surveys cast a pall over the outlook. The S&P is over 19 per cent lower for the year to date.