Canadian stocks came under pressure on Thursday, with the benchmark S&P/TSX Composite pulling back from its record high to end around the 20,150 level as heavyweight commodity stocks dragged down the index. The materials sector led losses by plunging almost 4%, dragged by gold producers that tracked lower prices, while heavyweight energy stocks also followed lower oil prices. On the data front, the latest figures from the ADP Canada National Employment Report showed that employment in Canada increased by 101,600 jobs from April to May. Yamana Gold Inc and First Majestic Silver Corp were the biggest laggards on the TSX, down 8% and 7.8%, respectively.

The US Dollar Index traded at 9-week highs of 91.852 in early trade Friday, following a post-FOMC breakout which fueled a rally to fresh multi-month highs as the US Federal Reserve policymakers flagged two rate increases by the end of 2023, with Jerome Powell also noting that the discussion about scaling back bond purchases will likely start soon. Among local data, initial jobless claims rose to 412K, the first increase in 7 weeks, and compared to forecasts of 359K, a sign that the labor market still has a long way to recover from the coronavirus hit. Also, fresh central bank forecasts showed a spike in inflation this year, although price pressures are seen slowing in 2022.

Gold prices added 12.04 points or 0.68% to 1785.356 on Thursday, holding near 5-month lows as both the Greenback and US Treasury yields soared after the Federal Reserve revised upwards its inflation forecasts earlier this week, noting that it expects two rate hikes by the end of 2023. In addition, European Central Bank President Christine Lagarde also said that monetary and fiscal stimulus should remain until there are clear signs that a "firm, solid and sustainable" economic recovery is underway despite inflation headwinds. The Fed has taken a similar view, with investors digesting the central bank's narrative that a surge in inflation is transitory and because of supply and demand imbalances.

Crude oil prices slipped on Friday, extending declines in the previous session as the dollar strengthened after the US Federal Reserve signaled it might raise interest rates as soon as 2023. Demand worries also resurfaced after new coronavirus cases jumped in Britain, while supply concerns over the return of Iranian barrels also weighed on the market. On the supply side, OPEC+ recently agreed to keep to their plan to gradually ease supply curbs through July, signaling the ongoing strengthening of market fundamentals. On Thursday, Brent crude futures fell $1.31, or 1.8%, to settle at $73.08 a barrel, while WTI crude fell $1.11, or 1.5%, to settle at $71.04. .

The NIKKEI 225 added 66.28 points or 0.23% to 29084.61 on Friday, partially retracing losses of 0.93% in the previous session as market participants were optimistic as the Japanese government decided Thursday to end the COVID-19 state of emergency covering Tokyo, Hokkaido, Osaka and six other prefectures Sunday, while keeping Okinawa under the measure for three more weeks. US Federal Reserve set a more hawkish tone and brought forward the time frame on when it will hike interest rates. Among data, Japan's core consumer prices rose 0.1% in May from a year earlier, in line with expectations, while earlier this week, the Reuters Tankan index rose 1 point from the previous month to 22 in June, the highest level in more than two years, as strong global demand helped the country's gradual recovery from the coronavirus pandemic.

The ASX 200 added 40.20 points or 0.55% to 7399.20 early in the Asian session on Friday, refreshing record highs after declines of 0.38% in the previous session. Investor sentiment was positive after Australia's seasonally adjusted unemployment came in at 5.1% in May 2021 yesterday, posting the 7th straight month of decline and the lowest reading since February 2020. Technology stocks were also boosted following a strong lead from Wall Street overnight, with Afterpay up 5.47% and Xero gaining 2.62%. Earlier this week, Reserve Bank governor Phil Lowe warned the nation’s lenders to maintain borrowing standards given soaring house prices while dampening expectations of strong wages growth in the wake of the coronavirus pandemic.

US Futures were flat in overnight trade Thursday as investors digested higher-than-expected claims figures and a surprisingly hawkish tone from the Fed. Initial jobless claims rose to 412K, the first increase in seven weeks, and compared to forecasts of 359K, a sign that the labor market still has a long way to recover from the coronavirus hit. On the policy side, the Fed now expects two rate increases by the end of 2023, with Powell also noting that the discussion about scaling back bond purchases will likely start soon. Also, fresh central bank forecasts showed a spike in inflation this year, although price pressures are seen slowing in 2022. In extended trade, Adobe added 2.66% after it reported quarterly earnings of $3.03 per share, while Smith & Wesson surged 5.27% after reporting better than expected quarterly earnings. On Thursday, the Dow Jones fell 210 points or 0.62% to 33823.45. The S&P 500 fell 0.04% to 4221.86. The Nasdaq Composite rose 0.87% to 14161.35.

European stocks closed virtually flat on Thursday, with the benchmark DAX hovering near records as investors weighed optimism over the region’s economic recovery against hawkish comments from the Federal Reverse. The Fed signaled it might raise interest rates as early as 2023, a faster pace than initially thought, while Chair Jerome Powell said there had also been initial discussions about a bond-buying tapering. This change in outlook has sparked a selloff in Wall Street, particularly in those economically sensitive sectors that had recently rallied. However, in Europe, the narrative is a bit different. The ECB adopted a wait-and-see approach after its June meeting, with President Christine Lagarde saying that monetary and fiscal stimulus should remain in place until the economy has further recovered.

New Zealand’s main stock index fell for the third session in a row on Friday, with the NZX 50 index dropping towards the 12,500 level as weakness in the technology sector offset gains among consumer staples. Market sentiment was still dominated by concerns that rising inflation will prompt central banks to tighten monetary policy sooner and more abruptly than expected. Kathmandu Holdings Ltd and Tourism Holdings Ltd were among the biggest laggards on the NZX, down 1.9% and 1.6%, respectively. As a result, the index is on track to end the week on a sour note.