© Reuters. FILE PHOTO: A man holding an umbrella looks at an electronic quote board outside a brokerage house in Tokyo April 7, 2015. REUTERS/Issei Kato
By Carolyn Cohn and Andrew Galbraith
LONDON/SHANGHAI – Global equities rose from 18-month lows the day before and the dollar retreated from 20-year highs on Friday, although investors remained nervous about high inflation and the impact of rising interest rates.
Markets are worried about the possibility of a recession, with the S&P approaching a bear market on Thursday, nearly 20% off its all-time high in January.
In an interview late Thursday, US Federal Reserve Chairman Jerome Powell said the battle to control inflation “would include some pain.” Powell reiterated his expectation of a half percentage point interest rate hike at each of the Fed’s next two policy meetings, while promising that “we are ready to do more.”
The war in Ukraine has added to supply chain disruptions and inflationary pressures already in place after more than two years of the COVID-19 pandemic, but stocks rebounded on Friday.
“There’s an awful lot of negative sentiment out there, we’re looking at a 40% probability of a recession,” said Patrick Spencer, vice president of equities at Baird Investment Bank.
“Many fund managers have reduced their equity allocations and raised cash, although we believe this is a correction rather than a bear market.”
The MSCI global stock index rose 0.32% after hitting its lowest level since November 2020 on Thursday, although it was heading for a 4% decline on the week, its sixth consecutive week of losses.
rebounded 1.13% after the S&P index fell 0.13% overnight, with the index also eyeing a sixth consecutive week of declines.
forecast for a sixth consecutive week of falls https://fingfx.thomsonreuters.com/gfx/mkt/zdpxoglxgvx/stx1305.PNG
European stocks rebounded 0.96% and 100 gained 1.17%.
The US dollar fell 0.22% to 104.54 against a basket of currencies, but remained near 20-year highs on safe-haven demand.
Russia has bristled at Finland’s plan to apply for NATO membership, with Sweden potentially following its lead.
Moscow called Finland’s announcement hostile and threatened retaliation, including unspecified “military-technical” measures.
The dollar rose 0.36% to 128.76 yen, while the euro gained 0.3% to $1.0408, recovering from Thursday’s five-year lows.
The cryptocurrency bitcoin also rose, hitting $30,000 after the collapse of TerraUSD, a so-called stablecoin, took it to a 16-month low of around $25,400 on Thursday.
“Some traders may see this month’s sharp decline as an opportunity to buy the dip, but given the highly volatile nature of the coins, the crypto house of cards could still collapse,” said analyst Susannah Streeter. principal of investments and markets at Hargreaves Lansdown (LON:).
The upward moves in equities were mirrored in US Treasuries, with the benchmark US 10-year yield hitting 2.9221% from a close of 2.817% on Thursday.
The policy-sensitive 2-year yield was 2.6006%, up from a close of 2.522%.
“In the shape of the US Treasury curve, we don’t see any particularly fresh recession/downturn signals, just the same sharp and consistent downturn predicted for H2 2023,” said Alan Ruskin, macro strategist at German Bank (ETR:), said in a note.
Yields on 10-year German government bonds rose slightly to 0.9250%.
MSCI’s broadest index of Asia-Pacific stocks outside Japan rose nearly 2% from Thursday’s 22-month closing low, cutting its losses for the week to less than 3%.
Australian stocks gained 1.93%, while the stock index jumped 2.64%.
In China, the blue-chip CSI300 index rose 0.75% and Hong Kong’s rose 2.71%, buoyed by comments from Shanghai’s deputy mayor that the city may begin to ease. some strict COVID restrictions this month.
“We had some pretty big moves yesterday, and when you see those big moves, it’s only natural to have a retracement, especially since it’s Friday before the weekend. not really a new narrative,” said Matt Simpson, senior market analyst at City Index.
Oil prices were higher amid an impending European Union ban on Russian oil, but were still set for their first weekly loss in three weeks, hit by concerns over inflation and lockdowns. China that are slowing global growth.
rose 0.75% to $106.97 a barrel, and the global benchmark rose 1.05% to $108.58 a barrel.
which had hit a three-month low on the back of the surging dollar, rose 0.2% to $1,824.61 an ounce.
Global Assets http://tmsnrt.rs/2jvdmXl
World currencies against dollar http://tmsnrt.rs/2jvdmXl
Emerging Markets http://tmsnrt.rs/2ihRugV
MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
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