Wall Street closed higher in the first session of the third quarter, as stocks bounced back from earlier losses amid thin trading volumes ahead of a holiday-extended weekend, with utilities, consumer services, and retailers leading gains. The Dow was up 322 points, the S&P 500 rose 1.1%, and the NASDAQ booked a 0.9% gain. Still, all three indexes posted weekly losses, NASDAQ underperformed with a 4.1% loss, the S&P fell 2.2% and the Dow shed 1.3%. Results from surveys of manufacturers showed activity levels in June remained near two-year lows, adding to a slew of weak data earlier this week, namely dire consumer morale and worse-than-expected GDP figures. Among individual stocks, chipmakers sank to the bottom after Micron released a gloomy outlook and retailer Kohl's plunged 19.7% after publishing disappointing guidance. Last session, the Dow and the S&P 500 booked their worst 1st half performances since 1962 and 1970, respectively, while the Nasdaq saw its worst-ever half-year run.

Brazil's trade surplus shrank to USD 8.8 billion in June of 2022 from USD 10.4 billion in the corresponding month of the previous year and missed market expectations of USD 10.0 billion. Exports rose 15.6% to an all-time high of USD 32.7 billion, on higher shipments of manufactured (38.5%) and agricultural (30.4%) goods, while sales abroad fell for mining products (-24.3%). Imports surged 33.7% to USD 23.9 billion, as purchases of mining products soared 144.4%, followed by a 27.9% jump in manufactured products, and a 22.8% increase in agricultural goods. Among major trading partners, shipments rose the most to Argentina (55.0%), the US (47.4%), and the EU (27.1%), while imports increased mostly from the US (47.9%), Argentina (38.2%), and China (25.2%).

WTI crude futures bounced back sharply from intraday lows, climbing more than 3% to $109.2 per barrel on Friday and recouping losses of the previous session, as investors continued to assess how tight global supplies remain amid a deteriorating demand outlook. OPEC+ agreed earlier this week to stick to its output strategy, increasing production by 648,000 barrels per day in July and August, despite signs that the physical crude market remains very tight. Supply outages in Libya and expected shutdowns in Norway also add to the bullish outlook. On the flip side, fears of a demand-sapping recession continued to hang over the market. On a weekly basis, the US benchmark added roughly 1.5% this week, on track to post its first weekly gain in three.

Annual inflation rate in the Euro Area increased to a new record high of 8.6% in June of 2022 from 8.1% in May, preliminary estimates showed. Figures topped market expectations of 8.4%, strengthening the case for the ECB's first rate hike in 11 years in July. Prices continued to accelerate for energy (41.9%, compared with 39.1% in May); food, alcohol & tobacco (8.9% vs 7.5%); non-energy industrial goods (4.3% vs 4.2%), but eased slightly for services (3.4% vs 3.5%). Excluding energy, inflation also increased to 5% from 4.6% but the core index which excludes cost of energy, food, alcohol & tobacco edged down to 3.7% from 3.8%. Compared to the previous month, consumer prices were up 0.8%, the same as in May.

Europe’s major stock indices closed around the flatline on Friday, namely Frankfurt’s DAX 0.1% higher but still near levels not seen since November of 2020 and the pan-European Stoxx 600 ending flat after seeing its sharpest first-half decline since 2008 the previous session. Fresh economic data amplified stagflation fears, as the ECB plans to begin its tightening cycle at its July meeting, after 11 years of ultra-easy monetary policy. Inflation in the Euro Area surged to a fresh record of 8.6% in June, showing no signs of peaking while manufacturing activity slowed in major European economies to levels not seen since 2020, PMI data confirmed. Meanwhile, the ECB started to buy bonds from countries including Italy, Spain, Portugal and Greece with some of the proceeds it receives from maturing German, French and Dutch debt in a bid to cap widening yield spreads, Reuters reported. On a weekly basis, the DAX fell 2.3%, the 5th week of losses in a row, and the Stoxx 600 dropped 1.5%.

The yield on the US Treasury 10-year note slipped below the 2.9% mark, a level not seen in a month, as investors rushed to safe-haven assets amid persistent fears that the Fed's aggressive tightening to tame sky-high will eventually tip the US economy into a recession. Weak economic data this week fueled those concerns further, namely signs of a slowdown in consumer spending, with morale among consumers at a 16-month low and worse-than-expected GDP figures. The core personal consumption expenditures index, the Fed's preferred inflation gauge, eased to a six-month low of 4.7 percent in May 2022, indicating that price increases could be slowing but still near multidecade highs. In Europe, a worsening growth outlook and record inflation prompted a similar rush for government debt, with Germany's 10-year Bund yield tumbling below 1.5% for the first time in four weeks.