Global stocks rose on Friday but remained on track for their longest weekly loss since the 2008 financial crisis, as worries about inflation and an economic slowdown continued to plague markets.
The FTSE All-World rose 2% as Wall Street and European stocks rose, but remained on track for a sixth straight weekly loss.
Wall Street’s benchmark S&P 500 eschewed a bear market on Thursday, falling nearly a fifth below its all-time high in January, after gaining 1.4 percent in New York afternoon on Friday. The tech-heavy Nasdaq Composite rose 2.7%. It is still down more than 25% so far this year.
Some investors described Friday’s gains as bear market rallywhich refers to short-term optimism in a long-term downtrend.
“Obviously, there have been a lot of tough weeks, and these trading sessions, the market is trying to bounce back,” said Antoine Lesne, investment strategist in State Street’s exchange-traded funds division. “But I’d love to say we’re still in bear market territory.”
Florian Ielpo, multi-asset portfolio manager at Lombard Odier, said market sentiment “has become so pessimistic that there’s a good chance we’ll see a rebound in the next few weeks.”
“Can it last for the rest of the year? We strongly disagree with that,” he added. “There’s only one way out of the inflationary period we’re going through right now — and that’s a slowdown in economic activity.”
Federal Reserve Chairman Jay Powell warn On Thursday, the goal of reducing inflation to 2 percent may not be achieved without “some pain.” The Federal Reserve’s monetary policy has been watched by central banks around the world, raising its key interest rate by half a percentage point last week and is expected to increase by the same amount in June, July and September.
Wednesday data show US consumer price inflation rose at an annual rate of 8.3% in April, down from the previous month but still at the level of the early 1980s.
A short-term rally in U.S. government bonds reversed on Friday, as recession fears drove safe-haven buying into traders calculating the impact of persistent inflation on fixed-coupon securities.
The yield on the 10-year Treasury note, which is inversely related to benchmark bond prices, rose 0.07 percentage point to 2.92%.
U.S. Treasuries, the world’s most important debt market, have been volatile in recent weeks as investors and traders remain on the sidelines harder to find Match sellers with buyers.
“All indicators point to very limited liquidity in the U.S. Treasury market,” said Paul O’Connor, head of the UK multi-asset team at Janus Henderson. “This reflects a shift in investor psychology between rising inflation and slowing growth,” he added, “many are now questioning whether the level of rate hikes already priced in is excessive”.
In Europe, the regional Stoxx 600 rose 2.1%. Asian markets also rose earlier in the day, with Hong Kong’s Hang Seng up 2.7% and Japan’s Nikkei 225 closing up 2.6%.
The U.S. dollar index, which measures the greenback against six major currencies, fell 0.2% but remained near a 20-year high. Brent crude rose 3.5% to just over $111 a barrel.