Federal Reserve head Jerome Powell was confirmed to his second term on Thursday
London (AFP) - Global stock markets rebounded Friday as fears eased about the pace of interest rate rises in the United States that are aimed at bringing down the country’s highest inflation in decades.
Wall Street pushed strongly higher with the Dow climbing 1.6 percent in late morning trading. The tech-heavy Nasdaq jumped 3.6 percent and the S&P rose 2.3 percent.
European equities all closed more than two percent higher following solid gains in Asia.
“It is largely a sentiment-driven trade wrapped up in the notion that stocks are deeply oversold and due for a bounce,” analysts at Briefing.com said.
Stocks have tumbled for much of this week on fears the Federal Reserve was planning to lift US interest rates by 75 basis points at a single meeting.
However, equities on Friday staged “a relief rally” after Fed boss Jerome Powell calmed nerves over the potential hefty increase, said Jeffrey Halley, analyst at OANDA trading group.
“The rally today looks more like a technical rebound after a torrid week than a structural turn in sentiment,” he added.
Investors also sold off stocks as they sought to reduce risk amid the Ukraine war and worried about the economic impact of China’s Covid lockdowns.
Those China worries also eased on Friday.
“Global sentiment seems to be getting some relief as China officials suggested that Covid-related lockdowns – which have been another source of uneasiness – may be set to ease,” analysts at Charles Schwab investment bank said.
Oil prices pushed higher Friday after much volatility, reaching around $110 per barrel yet again,
“Prices appear to be caught in a pincer of concern about slowing demand due to the impact of higher prices, as well as China’s Covid lockdowns and worries about Russian supply and the loss of that due to sanctions,” said analyst Michael Hewson at CMC Markets.
Meanwhile, the euro struck a new five-year low against the dollar.
Bitcoin held above $30,000, a day after the cryptocurrency slumped under $27,000, its lowest level since late 2020.
Its crash this week was fuelled by the collapse of two so-called “stablecoin” cryptocurrencies – TerraUSD and Tether – which proved to be anything but stable, leaving investors panicked.
On the corporate front, Twitter’s share price plunged after Elon Musk said he was putting a temporary halt on his much-anticipated $44-billion deal to buy the social media giant.
Its shares slumped more than seven percent and are trading below what Musk has promised to pay for the company’s shares.
Hewson said the announcement fuelled “concerns that Musk may be preparing the ground for backing out of the deal, although he will take a $1bn hit were he to do so.”
- Key figures at around 1530 GMT -
New York - Dow: UP 1.6 percent at 32,230.15 points
EURO STOXX 50: UP 2.5 percent at 3,668.92
London - FTSE 100: UP 2.6 percent at 7,418.15 (close)
Frankfurt - DAX: UP 2.1 percent at 14,027.93 (close)
Paris - CAC 40: UP 2.5 percent at 6,362.68 (close)
Hong Kong - Hang Seng Index: UP 2.7 percent at 19,898.77 (close)
Shanghai - Composite: UP 0.9 percent at 3,084.28 (close)
Tokyo - Nikkei 225: UP 2.6 percent at 26,427.65 (close)
Brent North Sea crude: UP 3.1 percent at $110.80 per barrel
West Texas Intermediate: UP 3.5 percent at $109.80 per barrel
Euro/dollar: UP at $1.0413 from $1.0382 at 2100 GMT Thursday
Pound/dollar: UP at $1.2238 from $1.2199
Euro/pound: UP at 85.10 pence from 85.08 pence
Dollar/yen: DOWN at 129.20 yen from 129.97 yen