Global stock markets and oil prices jumped higher on Friday following recent heavy losses on fears that interest rate hikes aimed at cooling decades-high inflation will spark a global recession
London, (UrduPoint / Pakistan Point News – 24th Jun, 2022 ) :Global stock markets and oil prices jumped higher on Friday following recent heavy losses on fears that interest rate hikes aimed at cooling decades-high inflation will spark a global recession.
With a spate of data pointing to an economic slowdown, market watchers are saying investors now believe central banks may need to deal out less punishing interest rate hikes, and thus the pushing of equity markets into bear market territory may have been an overreach.
But he warned that stock markets remain “vulnerable to another onslaught if the news does not improve”.
Asian stock markets closed higher after Thursday’s gains on Wall Street.
Wall Street kept on rising on Friday, with all three major indices up over two percent in late morning trading.
Federal Reserve boss Jerome Powell this week told lawmakers a recession was “certainly a possibility”.
He suggested officials were ready to press on with big rate hikes, following last week’s three-quarter point increase for US borrowing costs that sent markets tanking.
Hong Kong shares were among the biggest winners Friday thanks to a rally in tech giants including Alibaba, Tencent and NetEase.
Analysts have been pointing to falling commodity prices, a Primary driver of inflation, in the face of a possible recession reducing the need for sharp interest rate hikes as one possible explanation for the renewed bullish sentiment on equity markets.
“Falling interest rates and falling commodity prices, which typically go hand-in-hand with a growth slowdown, have been held out as developments working in favor of the rebound effort,” said Patrick O’Hare, analyst at Briefing.com.
“There is some truth to that, knowing that rising interest rates and rising commodity prices have been upsetting factors for most of the year, but one has to be careful stretching the credibility of those rally catalysts knowing that slower growth is going to translate into lower earnings growth prospects” for companies, he added.
Revised US consumer sentiment data — the initial reading of which may have helped push the US Fed into its massive 0.75 percentage point hike — also showed weaker inflation expectations and a new record low in consumer confidence.
“This decline in inflation expectations has served to act as an additional tonic for markets as we headed towards the weekend,” he added.
– Key figures at around 1530 GMT – New York – Dow: UP 2.2 percent at 31,338.15 points EURO STOXX 50: UP 3.0 percent at 3,538.15 London – FTSE 100: UP 2.7 percent at 7,208.81 (close) Frankfurt – DAX: UP 1.6 percent at 13,118.13 (close) Paris – CAC 40: UP 3.2 percent at 6,073.35 (close) Tokyo – Nikkei 225: UP 1.2 percent at 26,491.97 (close) Hong Kong – Hang Seng Index: UP 2.1 percent at 21,719.06 (close) Shanghai – Composite: UP 0.9 percent at 3,349.75 (close) Euro/dollar: UNCHANGED from late Thursday at $1.0523 Pound/dollar: UP at $1.2290 from $1.2260 Euro/pound: UP at 85.85 pence from 85.83 pence Dollar/yen: UP at 135.10 Yen from 134.95 yenBrent North Sea crude: UP 3.5 percent at $113.85 per barrelWest Texas Intermediate: UP 3.9 percent at $108.34 per barrel