Global shares rise as U.S. consumer holds up, yen weak ahead of Japan vote

Global shares edged higher on Friday as robust U.S. economic data and corporate earnings this week tempered tariff concerns for now, while the yen headed toward a second successive weekly loss ahead of a crunch legislative election in Japan on Sunday.

Stronger-than-expected U.S. retail sales and jobless claims suggesting modest improvement in economic activity helped to push the S&P 500 and the Nasdaq to close at record highs on Thursday.

Asian and European shares followed suit with gains on Friday, with Asian shares outside Japan up 0.9% (.MIAPJ0000PUS), while European stocks were last up 0.4% SXXP. Wall Street futures ES1!, NQ1! were also up around 0.1%.

A solid start to earnings season in the U.S. - with companies including streaming giant Netflix O> beating forecasts - was also supporting investor confidence, said Eren Osman, managing director of wealth management at Arbuthnot Latham.

"We're pretty constructive on the (U.S.) macro backdrop... We do see some scope for slowing growth, but not for anything material and that's giving the markets quite a nice bounce," Osman said, adding the potential full impact of U.S. tariffs was still in focus.

Alphabet and Tesla are among the companies reporting half-year results next week, which will further test the market mood.

The dollar was USDJPY broadly flat against the yen at 148.65 but was down nearly 1% this week after polls showed Prime Minister Shigeru Ishiba's coalition was in danger of losing its majority in the upper house election on Sunday.

Data on Friday showed Japan's core inflation slowed in June due to temporary cuts in utility bills but stayed above the central bank's 2% target. The rising cost of living, including the soaring price of rice, is among the reasons for Ishiba's declining popularity.

"If PM Ishiba decides to resign on an election loss, USDJPY could easily break above 149.7 as it would usher in an initial period of political turbulence," said Jayati Bharadwaj, head of FX strategy at TD Securities.

"JPY could reverse the recent dramatic weakness if the ruling coalition wins and is able to make swift progress on a trade deal with Trump."

In currency markets, the U.S. dollar index DXY slipped 0.1% to 98.365, but was heading for a second successive weekly gain, bouncing from a 3-1/2 year low hit over two weeks ago.

Fed Governor Christopher Waller said on Thursday he continues to believe the central bank should cut interest rates at the end of this month, though most officials who have spoken publicly have signalled no desire to move.

Treasury yields were slightly lower. Benchmark 10-year U.S. Treasury yields US10Y dropped 2 basis points to 4.44%, two-year yields (US2YT=RR) also edged 2 bps lower to 3.90%.

Oil prices extended gains on Friday, after drone strikes on Iraqi Kurdistan oil fields fuelled supply concerns.

U.S. crude CL1! rose 0.4% to $67.81 per barrel and Brent BRN1! also rose 0.4% to $69.79 a barrel. Spot gold prices GOLD gained 0.3% to $3,348 an ounce.