This encouraged investors, helping the three main Wall Street indices will gain more than 1%. The pan-European STOXX 600 jumped 2% from six-week lows hit on Thursday, while Britain’s FTSE improved 1.9%.
Stock market recovery helped MSCI World Stock Index gain 1.2%. However, in the week it is headed for a drop of 1.9%, which would mean the third consecutive drop.
New lockdowns in China had previously fueled concerns about global growth, and high energy costs from the war in Ukraine are weighing on Europe.
“The market is focused on how aggressive the Fed is going to be with its rate hike cycle,” said Giles Coghlan, chief currency analyst at HYCM, adding that rate hike expectations had solidified since last week’s speech from the Fed Chairman Jerome Powell in Jackson Hole.
Markets are worried about “the slowdown in China, the recession in the euro zone and a hard-line Federal Reserve“, he pointed.
The dollar, which benefits from rate hikes, hit a new 24-year high against its Japanese peer at 140.80 yen, prompting Japanese Finance Minister Shunichi Suzuki to warn of action. “adequate” to curb volatility. By noon in New York, the yen had fallen to 140.07 units.
The dollar index, which compares the greenback to a basket of six major currencies, fell 0.6% to 108.95 units, after hitting a 20-year high in the previous session. A weaker dollar pushed the euro up 0.8% to $1.0027.
In fixed income markets, the two-year US Treasury bond yield fell to 3.4141%, after hitting a 14-year high of 3.5510% the day before. The return on the 10-year notes fell to 3.2139%.
MSCI’s broader index of Asia-Pacific stocks excluding Japan lost 0.6%, its worst weekly performance since mid-June, plunging 3.6%. Japan’s Nikkei was flat and Chinese equities fell 0.5%.
Crude oil prices, meanwhile, gained around 1.75%, recouping much of their recent losses on expectations that OPEC+ will discuss production cuts next week, and spot gold improved 1.2. %, at $1,716.89 per ounce.
Source: Ambito
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