- Wall St opens higher, Twitter slumps as Musk suspends deal
- European stocks find support at the end of a volatile week
- Oil is rising but expected to fall weekly
NEW YORK, May 13 (Reuters) – Global stocks rose on Friday and investor sentiment stabilized after a volatile week of trading, helping to lift stock indexes in the United States and Europe.
Global markets, particularly US equities, turned sharply this week as investors worried about the possibility of a recession. The S&P is down nearly 20% from its all-time high in January and was close to a bear market on Thursday.
Investors are worried about whether US Federal Reserve Chairman Jerome Powell can accomplish a “soft landing,” where the Fed raises interest rates just enough to reduce high inflation without causing a contraction in the economy.
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In an interview Thursday night, Powell said the battle to control inflation “would include some pain,” and he reiterated his expectation of interest rate hikes of half a percentage point each the next two Fed policy meetings. Read more
The war in Ukraine has added to supply chain disruptions and inflationary pressures already in place after more than two years of the COVID-19 pandemic, but stocks rebounded on Friday.
“There’s an awful lot of negative sentiment out there, we’re looking at a 40% probability of a recession,” said Patrick Spencer, vice president of equities at Baird Investment Bank.
“Many fund managers have reduced their equity allocations and raised cash, although we believe this is a correction rather than a bear market.”
The MSCI gauge for stocks around the world (.MIWD00000PUS) gained 2.17% at 10:25 a.m. ET (1425 GMT), after hitting its lowest since November 2020 on Thursday. The pan-European STOXX 600 index (.STOXX) rose 2.03%.
The Dow Jones Industrial Average (.DJI) rose 490.54 points, or 1.55%, to 32,220.84, the S&P 500 (.SPX) gained 90.03 points, or 2.29%, to 4,020.11 and the Nasdaq Composite (.IXIC) added 389.27 points, or 3.42%, to 11,760.23.
Emerging market stocks rose 1.74%. MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) rose 1.95% from Thursday’s 22-month closing low. The Japanese Nikkei (.N225) rose 2.64%.
China’s blue-chip CSI300 index (.CSI300) rose 0.75% and Hong Kong’s Hang Seng (.HSI) rose 0.85%, buoyed by comments from Shanghai’s deputy mayor that the city may begin easing some tough COVID restrictions this month. Read more
Markets are expected to rebound in the short term before resuming the sell-off that has sent Wall Street’s Nasdaq Technology Index (.NDX) down more than 25% since the start of the year, BofA analysts wrote in a weekly strategy note.
Shares of Twitter Inc (TWTR.N) fell 10% to $40.50 in morning trading on Friday after Elon Musk tweeted that his $44 billion cash deal for the media platform social was “temporarily suspended” pending data on the proportion of fake accounts on the platform. Read more
Investors sold $10.53 billion worth of global equity funds in the week ending May 11, compared with $1.65 billion in net sales the previous week, according to Refinitiv Lipper. Read more
The US dollar was lower at 104.68 against a basket of currencies, but remained close to 20-year highs from the previous day on demand for safe havens.
Russia has bristled at Finland’s plan to apply for NATO membership, calling Finland’s announcement hostile and threatening retaliation. Read more
The dollar index fell 0.057%, with the euro up 0.06% at $1.0385.
The Japanese yen weakened 0.85% against the greenback at 129.41 to the dollar, while the pound last traded at $1.2205, up 0.05% on the day.
Headline eurozone inflation will fall in the second half of the year but so-called core prices, which exclude food and energy, will continue to rise, European Central Bank Vice President Luis de Guindos said on Friday. .
The cryptocurrency bitcoin also rose, hitting $30,000 after the collapse of TerraUSD, a so-called stablecoin, took it to a 16-month low of around $25,400 on Thursday. Read more
“Some traders may see this month’s sharp fall as an opportunity to buy the dip, but given the extremely volatile nature of the coins, the crypto house of cards could still collapse,” said analyst Susannah Streeter. Head of Investments and Markets at Hargreaves Lansdown. .
The upward moves in equities were mirrored in US Treasuries, with the benchmark US 10-year yield hitting 2.9349% from a close of 2.817% on Thursday.
The policy-sensitive 2-year yield was 2.6254%, down from a close of 2.522%.
Yields on 10-year German government bonds rose slightly to 0.8870%.
Oil prices rose on Friday but were heading for their first weekly loss in three weeks.
Brent crude futures rose 2.78% to $110.44 a barrel at 1345 GMT, while US West Texas Intermediate (WTI) crude futures rose 2.92% to $109.23 a barrel. Both benchmark contracts, however, were on track to post slight declines for the week.
Spot gold fell 0.4% to $1,814.90 an ounce. US gold futures fell 0.55% to $1,813.70 an ounce.[GOL/]
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Reporting by Elizabeth Dilts Marshall; Additional reporting by Carolyn Cohn in London and Andrew Galbraith in Shanghai and Dhara Ranasinghe in London; Editing by Jane Merriman and Nick Zieminski
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