Global stocks rose on Friday and investor sentiment stabilized after a volatile week of trading, helping to push up stock indexes in the United States and Europe.
Global markets, particularly US equities, turned sharply this week as investors worried about the possibility of a recession. The S&P is down nearly 20% from its all-time high in January and was close to a bear market on Thursday.
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In an interview Thursday night, Powell said the battle to control inflation “would include some pain,” and he reiterated his expectation of interest rate hikes of half a percentage point each the next two Fed policy meetings.
“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 Dow Jones Industrial Average rose 490.54 points, or 1.55%, to 32,220.84, the S&P 500 gained 90.03 points, or 2.29%, to 4,020.11 and the Nasdaq Composite added 389.27 points, or 3.42%, to 11,760.23.
Emerging market stocks rose 1.74%. MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 1.95% from Thursday’s 22-month closing low. The Japanese Nikkei rose 2.64%.
Investors sold $10.53 billion worth of global equity funds in the week ending May 11, compared with $1.65 billion in net sales the previous week, according to Refinitiv Lipper.
The US dollar was lower at 104.68 against a basket of currencies, but remained close to 20-year highs from the previous day on demand for safe havens.
The dollar index fell 0.057%, with the euro up 0.06% at $1.0385.
The Japanese yen weakened 0.85% against the greenback at 129.41 to the dollar, while the pound last traded at $1.2205, up 0.05% on the day.
“Some traders may see this month’s sharp fall as an opportunity to buy the dip, but given the extremely volatile nature of the coins, the crypto house of cards could still collapse,” said analyst Susannah Streeter. Head of Investments and Markets at Hargreaves Lansdown. .
The upside moves in equities were mirrored in US Treasuries, with the benchmark US 10-year yield hitting 2.9349% from a close of 2.817% on Thursday.
The policy-sensitive 2-year yield was 2.6254%, down from a close of 2.522%.
Yields on 10-year German government bonds rose slightly to 0.8870%.
Oil prices rose on Friday but were heading for their first weekly loss in three weeks.
Spot gold fell 0.4% to $1,814.90 an ounce. US gold futures fell 0.55% to $1,813.70 an ounce.
(Edited by : Anand Singha)