Global stocks surged on Friday as Wall Street rebounded to cap a tumultuous week of trading, while oil rose 4% on the back of record-high gas prices in the United States. The majority of this week saw global markets and US stocks fall substantially as investors were concerned about the potential of a recession. On Thursday, the S&P 500 index came close to a bear market after falling over 20% from its all-time high in January.
According to preliminary data, the S&P 500 gained 94.57 points, or 2.41%, to end at 4,024.65 points, while the Nasdaq Composite gained 436.61 points, or 3.84%, to 11,807.57. The Dow Jones Industrial Average rose 466.43 points, or 1.47%, to 32,196.73. Despite Friday’s gains, the S&P 500 and the Nasdaq posted their sixth consecutive weekly loss, and the Dow notched its seventh consecutive weekly dip.
But investors’ fears over whether U.S. Federal Reserve Chair Jerome Powell can accomplish a “soft landing” – bringing inflation down while keeping the U.S. economy growing – appeared to ease at least temporarily on Friday. MSCI’s gauge of stocks across the globe gained 2.30% at 4:07 p.m. ET (2007 GMT), after hitting its lowest since November 2020 on Thursday. The pan-European STOXX 600 index rose 2.14%.
Emerging market stocks rose 1.83%. MSCI’s broadest index of Asia-Pacific shares outside Japan rallied 2.01% from Thursday’s 22-month closing low. Japan’s Nikkei rose 2.64%. “Stocks were ready to rebound as some investors remain hopeful the Fed will deliver a soft landing, while others are ready to buy the dip,” said Edward Moya, analyst at OANDA.
Oil prices jumped 4% as U.S. gasoline prices jumped to a record high and China looked ready to ease pandemic restrictions. Brent futures rose $4.10, or 3.8%, to settle at $111.55 a barrel. U.S. West Texas Intermediate (WTI) crude rose $4.36, or 4.1%, to settle at $110.49.
Cryptocurrencies steadied on Friday, with bitcoin recovering from a 16-month low after a volatile week dominated by the collapse in value of TerraUSD, a so-called stablecoin. Bitcoin, the largest cryptocurrency by market value, rose 3.5% to $29,884, rebounding from a December 2020 low of $25,400 hit on Thursday. Bitcoin remains far below week-earlier levels of around $40,000 and is on track for a record seventh consecutive weekly loss.
Markets are likely to experience a short-term rebound before resuming the sell-off which has sent Wall Street’s Nasdaq tech index down over 25% since the beginning of the year, BofA analysts wrote in a weekly strategy note. Investors liquidated global equity funds worth $10.53 billion in the week ended May 11, compared with $1.65 billion of net selling in the previous week, according to Refinitiv Lipper.
In an interview late on Thursday, Powell said the battle to control inflation would “include some pain,” and he repeated his expectation of half-percentage-point interest rate rises at each of the Fed’s next two policy meetings. Headline inflation in the euro zone will fall in the second half of the year but so-called core prices, which strip out food and energy, will keep rising, the European Central Bank’s vice-president Luis de Guindos said on Friday.
The dollar was lower on Friday but remained on track for a weekly gain. The dollar index fell 0.2%, with the euro up 0.21% to $1.0401. The Japanese yen weakened 0.77% versus the greenback at 129.32 per dollar, while sterling was last trading at $1.2232, up 0.27% on the day. The moves higher in equities were mirrored in U.S. Treasuries, with the benchmark U.S. 10-year yield edging up to 2.9367% from a close of 2.817% on Thursday. The policy-sensitive 2-year yield was 2.5986%, from a close of 2.522%. Gold fell more than 1% on Friday and is set for its fourth straight weekly decline, as the dollar’s strength sapped appetite for bullion. Spot gold dropped 0.8% to $1,807.79 an ounce. U.S. gold futures fell 0.59% to $1,807.40 an ounce.
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