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 Wall Street was set to open lower after another big drop in Apple
shares on Thursday spilled over into weakness for other major stock
markets.
European shares drew some strength from solid economic growth
numbers from Germany and other euro zone economies, but overall were
still a touch down on the day.
Doubts over growth in Europe, the financial stability of China and
the U.S. Federal Reserve's ability to raise interest rates have
dominated the past month and U.S. retail sales and Chinese releases
over the next 24 hours will be important new pieces of the picture.
The dollar - whose strength over the past three years is broadly a
reflection of how the United States is outpacing its peers - hit a
two-week high against a basket of currencies on Friday, posting its
best fortnightly performance since February.
That still looks more about the weakness of other growth-dependent
currencies rather than dollar strength per se and the yen - the
chief refuge for investors in times of stress - was higher against
the greenback.
"Optimism from earlier this year that policy stimulus in China would
provide more support for economic growth in Asia appears to be
fading," said Lee Hardman, a currency analyst with Bank of
Tokyo-Mitsubishi in London.
"In these circumstances, commodity-related and emerging market
currencies are coming back under downward pressure."
Oil prices, whose slow recovery has been a help to sentiment since
January, were down 1 percent.
Data at the end of the Chinese trading day showed banks extended
just 555.6 billion yuan ($85.22 billion) in net new yuan loans in
April, well below analysts' expectations and less than half the
1,370 billion yuan reported in March.
While growth in Germany doubled, Berlin's economy ministry warned it
would slow in the second quarter and economists said weaker exports
to slowing emerging markets like China would eventually begin to
tell on demand.
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After a poor first quarter and another set of weaker jobs numbers last week
there are also more doubts over how robust the U.S. economy will be going
forward.
Two Fed policymakers - Eric Rosengren and Esther George - both sounded
optimistic on Thursday on the chances of raising interest rates later this year.
But U.S. interest rate markets do not seem to believe them: pricing shows the
chances of rates being unmoved by the end of this year have risen to more than
40 percent.
Still, both are voters on the U.S. central bank's policy committee this year and
the comments by Boston Fed President Rosengren, in the past a supporter of
keeping rates low for longer, point to the growing pressure within the bank for
a hike this year.
"What we’re seeing is the Fed just trying to maintain some flexibility - it
doesn't want the market to decide policy for it, so it wants to keep its options
open," said Neil Mellor, a strategist with BNY Mellon in London.
(Editing by Ralph Boulton)
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