European stock indexes faltered on Friday, even after strong Amazon earnings, while a sell-off briefly pushed German 5-year bonds positive for the first time in four years after the European Central Bank was more hawkish than expected.

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Asian equities held firm overnight and Wall Street futures rebounded due to better-than-expected earnings from Amazon, which lifted the company`s shares about 14% in after-market trade. Earlier on Thursday there had been heavy selling following Facebook owner Meta Platforms` earnings miss.

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The rebound in sentiment did not persist in early European trading, with the STOXX 600 down 0.3% at 0910 GMT.

But the MSCI world equity index, which tracks shares in 50 countries, was still up around 0.2% on the day and set for its best week so far this year.

"What the earnings season tells you is that the underlying prospects of companies are still pretty good," said Michael Metcalfe, head of macro strategy at State Street.

"I tend to think that the buy-the-dip mentality is still there."

Market sentiment has been dominated by speculation about the trajectory for rate hikes from major central banks this year, as pressure mounts for policy moves to combat inflation. Rate hikes typically hurt riskier assets such as stocks.

In a move labeled by analysts as a "pivot", European Central Bank President Christine Lagarde was more hawkish than expected at the central bank`s meeting on Thursday. She finally acknowledged mounting inflation risks and declined to repeat her previous guidance that an interest rate increase this year was "very unlikely."

The euro jumped on Thursday and extended its gains on Friday, hitting a three-week high. At 0921 it was up 0.1% on the day at $1.1455.

European government bond yields also rose. Germany`s 5-year yield briefly turned positive as traders priced in ECB rate hikes this year. Germany`s 2-year yield was set for its biggest weekly rise since 2008.

"The inflation challenge that central banks are facing, and having to react to, is not just a U.S. phenomenon," said State Street`s Metcalfe.

"In other markets, we`ve got a series of hikes priced in and so it may well be now that European markets have to digest the possibility of that."

"When central banks have pivoted, rate markets have pivoted even more and have tended to overshoot, so I think there’s probably a risk of that in Europe."

The U.S. 10-year yield was at 1.822%. Investors expect the U.S. Federal Reserve to begin hiking rates at its March meeting [IRPR].

But Australia`s central bank was still content to keep policy ultra-loose in its quarterly statement on monetary policy, even as it sharply revised up its outlook for inflation and projected unemployment at 50-year lows.

The Bank of Japan brushed aside the view that it could follow in the footsteps of its more hawkish U.S. and European peers.

The dollar index was steady at 95.334, while the Japanese yen was at 115.015 and the Australian dollar - which is seen as a liquid proxy for risk appetite - was down 0.4% at $0.71085.

The cryptocurrency bitcoin has strengthened in the past week but, at just under $38,000, it remains far below the all-time high of $69,000 it hit last November.

Elsewhere, oil prices were headed for their seventh straight weekly gain, with U.S. WTI crude at a seven-year high.

U.S. jobs data is due later in the session, but market focus is more on U.S. inflation figures due next week, which could influence the Fed`s policy and rates markets, State Street`s Metcalfe said.