All three main indexes in New York rallied at least 1% on Friday, as dovish remarks from several Fed officials soothed concerns that rising inflation will prompt the US central bank to tighten policy sooner than expected. Fed policymakers have said that any increase in price pressures will be transitory and expected to wane as supply chains adjust to rising demand. The shift in sentiment was accompanied by a disappointing retail sales report, which helped curbed some long-term fears of inflation. In the first half of the week, however, trading floors were awash with red after a higher-than-expected reading on US inflation fuelled bets of potential tapering of the Federal Reserve’s bond-buying before year’s end. As a result, the blue-chip Dow ended this week down 1%, while the S&P 500 and the tech-heavy Nasdaq slumped 1.4% and 2.3%, respectively.

Oil prices moved higher on Friday, with WTI crude rising 2.4% to $65.37 a barrel and Brent settling 2.5% higher at $68.71 a barrel on the back of a weaker dollar and prevalent risk appetite. Both benchmarks rebounded from an over 3% plunge in the previous to end the week on a high note as fears of gasoline shortages due to an outage at the largest US fuel pipeline and falling US inventories gave some optimism to oil bulls. On the supply side, OPEC+ started this month a gradual easing of its oil production curbs, pumping an extra 350,000 barrels a day, saying that demand will grow by 5.95 million barrels per day in 2021, helped by the swift rollout of coronavirus vaccinations worldwide. Also, the EIA predicted oil demand will outstrip supply as economies emerge from the pandemic.

Canada’s main stock index ended above the 19,300 level on Friday, notching its biggest daily percentage gain since April 1, as heavyweight energy and mining stocks found support in robust commodities prices. On the economic front, manufacturing sales rose to the highest level since June 2019, while wholesale sales in Q1 were the highest in a single quarter on record. SNC-Lavalin Group Inc rose more than 15%, the most on the TSX, following better-than-expected earnings results. Still, the index ended the week on a sour note amid concerns that a pick-up in inflation would force central banks to tighten monetary policy sooner than expected.

Retail sales in the US unexpectedly stalled in April of 2021, disappointing markets that expected a 1% increase. It follows an upwardly revised 10.7% surge in March when the first round of stimulus checks was sent to most households. Falls in sales at clothing stores (-5.1%), general merchandise stores (-4.9%), sporting goods, hobby, musical instruments and books (-3.6%), gasoline stations (-1.1%) and nonstore retailers (-0.6%), offset rises at motor vehicles and part dealers (2.9%), food services and drinking places (3%) and electronics (1.2%). The so-called core retail sales, which exclude automobiles, gasoline, building materials and food services and which correspond most closely with the consumer spending component of GDP, dropped 1.5%. Still, retail sales are likely to rebound in coming months amid record saving and as the economy continues to recover and state and local governments further ease restrictions on businesses.

European stocks inched higher on Friday, with the benchmark DAX finishing more than 1% higher around the 15,400 level, as dovish remarks from several central bankers soothed concerns that rising inflation will prompt central banks to tighten policy sooner than expected. Fed chair Jerome Powell and Andrew Bailey, Governor of Bank of England, have argued any increase in price pressure will be transitory and expected to wane as supply chains adjust to rising demand. In the first half of the week, however, trading floors were awash with red after a higher-than-expected reading on US and German inflation sparked speculation that central banks may have to tweak policy soon to prevent economies from overheating. As a result, Europe ended a roller-coaster week mostly lower, with the STOXX 600 benchmark closing almost 1% down.

The University of Michigan's consumer sentiment for the US fell to 82.8 in May of 2021 from 88.3 in April, well below forecasts of 90.4, preliminary estimates showed, due to rising inflation. Inflation expectations for the year ahead surged to 4.6% from 3.4% and the 5-year outlook to 3.1% from 2.7%, the highest levels in a decade. Rising inflation also meant that real income expectations were the weakest in five years. Meanwhile, the current economic conditions subindex went down to 90.8 from 97.2 and the expectations gauge declined to 77.6 from 82.7. "It should be no surprise that consumers anticipate a booming economy over the next year or so, including rapid job gains as well as increases in the inflation rate and interest rates. Indeed, consumers think these economic prospects are the natural result of stimulating an economic boom from last year's shutdown".

Brazilian stocks rose for a second session on Friday, with the benchmark Bovespa closing above the 121,800 level as investors refocused on prospects of global recovery after dovish comments from Fed's officials eased concerns that central banks would have to unwind its massive policy support sooner than expected. Qualicorp Consultoria e Corretora de Seguros SA and Cia Hering were among the biggest gainers on the index, up 7.2% and 6.4%, respectively. Still, the main Sao Paulo stocks index ended the week on a sour note.

Gold rallied nearly 1% to above $1,840 an ounce on Friday, just shy of a three-month peak of $1,845 touched earlier this week amid general dollar weakness and falling Treasury yields. Concerns that rising inflation would force central banks to tighten policy faded after a disappointing retail sales report and dovish comments from several Fed policymakers. Aside from economic headlines, the precious metal benefited from safe-haven demand stemming from the ongoing coronavirus crisis. Still, bullion ended the second week of May more than 1% down.

Total industrial production in the United States increased 0.7 percent from a month earlier in April 2021, easing from an upwardly revised 2.4 percent growth in March and missing market consensus of a 1.0 percent advance. Manufacturing output rose 0.4 percent, due to the return to operation of plants that were damaged by February's severe weather in the south central region of the country and had remained offline in March. However, factory output was hit by a drop in motor vehicle assemblies that principally resulted from shortages of semiconductors. The indexes for mining and utilities increased 0.7 percent and 2.6 percent, respectively.