U.S. stocks bounced back in the final hour of trading Thursday to cap a choppy session in the green as investors continued to mull a hawkish readout of minutes from the Federal Reserve’s last policy-setting meeting that suggested more aggressive monetary tightening is underway. The S&P 500 pared losses to rise 0.4%, and the Dow Jones Industrial Average was up roughly 0.3% after tumbling 300 points in intraday trading. The Nasdaq Composite recovered from a drop of more than 1% to close just above breakeven. The tech-heavy index, which began the week with a 2% pop, previously ended two consecutive sessions 2.2% lower. The 10-year Treasury yield climbed again to yield 2.652% — the highest level in three years.
European equity markets advanced more than 1% on Friday, with the pan-European STOXX 600 index attempting to end a volatile week in positive territory led by financials and auto stocks as all major sectors were in the green. Germany's DAX was up almost 1.5%, snapping a 3-day losing streak but was still on course for an over 1% weekly loss. Meanwhile, traders will keep a close eye on the first round of the French presidential election on Sunday with polls showing far-right Le Pen closing in on Macron.
The FTSE 100 traded 1% higher at around 7-week highs of 7,630 on Friday, and is heading for its fifth consecutive week of gains led by gains in defensive sectors including pharmaceuticals and utilities. Meanwhile, The CAC 40 was trading around the 6560 level, moving towards a slight gain tracking a bullish reversal on Wall Street yesterday. Utility stocks led the surge with gains coming particularly from Alstom (+3.7%), ArcelorMittal (+3.4%), and Saint Gobain (+3%). Also, Eurofins scientific added more than 1% as HSBC raised its recommendations.
The FTSE MIB index was 1.8% higher to hover above the 24,700 level on Friday. Banco Bpm shares surged 13.6% to lead the gains in Milan after Credit Agricole acquired a 9.2% stake in the Italian Bank, following talks by the two lenders in 2020 which led nowhere. Meanwhile, The Ibex 35 was trading around the 8590 level, rebounding from a 2-session losing streak and tracking gains in Wall Street, which closed higher yesterday after two consecutive days of cuts. Gains were led by banks, with Sabadell rising the most, above 4.5%, followed by Santander (+3.2%), BBVA, Bankinter and CaixaBank. Also heavyweights like ArcelorMittal (3.2%), Acerinox (+2.9%) and Fluidra (+2.1%) contributed positively to the index.
The Nikkei 225 Index rose 0.4% to close at 26,986 while the broader Topix Index edged up 0.2% to 1,897 on Friday, but both benchmarks fell about 2.4% for their second straight weekly decline, as the prospect of aggressive global rate hikes rattled investors throughout the week. The latest Federal Reserve minutes showed that officials planned to reduce the central bank’s massive balance sheet by about $95 billion a month, and indicated that one or more 50 basis point interest rate hikes could be warranted to combat surging inflation. Technology, healthcare and commodity stocks mostly advanced on Friday, while auto, distribution and transportation names slumped. Meanwhile, Toyota shares dropped 3.4% amid Australian media reports that it could face a A$2 billion fine over faulty diesel particulate filters.
The BSE Sensex fell 99 points or 0.17% to 58,931 in early trade early on Friday, down for the fourth straight session and on its way to drop 0.6% weekly, after the central bank raised inflation expectations to 5.7% for the current FY and said it would restore the width of the liquidity adjustment facility to 50 basis points. At the same time, the board kept the repo rate steady at 4% to support post-pandemic economic Tata Group launched its e-commerce "super app" offering everything from apparel to air tickets in a renewed push for a slice of a fast growing market dominated by Amazon.com and Walmart'se Flipkart. Tech Mahindra fell 0.82%, while HDFC and TCS dropped by 0.5% and 0.6%, each.
The Shanghai Composite rose 0.5% to close at 3,252 while the Shenzhen Component lost 0.1% to 11,959 in mixed trade on Friday, but with both indexes ending the week lower, as concerns over the economic fallout from China’s Covid lockdowns outweighed expectations of additional policy support. Weak manufacturing and services activity data raised hopes for further monetary easing, with investors expecting a 10 basis point rate cut to key policy loan rates and a potential reduction in the reserve requirement ratio in the second quarter. Property stocks rose on easing credit and regulatory policies, with gains from China Vanke (2.8%), Shenzhen New Nanshan (10%) and Langold Real Estate (9.9%). Meanwhile, technology, healthcare and service-related stocks declined.
The S&P/ASX 200 Index rose 0.5% to close at 7,478 on Friday, recovering some losses from the past two sessions as mining and coal stocks advanced, while investors continued to assess the Federal Reserve’s aggressive tightening plans of combat surging inflation. Earlier this week, the Reserve Bank of Australia also dropped its pledge of staying patient and signaled it could begin raising interest rates within months if wages and inflation data produce strong results. The EU banned coal imports from Russia in its first move against Moscow’s crucial energy revenues, rattling markets and lifting local coal shares including Whitehaven Coal (3.9%), New Hope (2.1%), Arizona Lithium (5.7%) and Coronado Global (1.9%). Mining firms also advanced, with gains from BHP Group (1.7%), South32 (1%), Paladin Energy (13.1%), Mineral Resources (2.2%) and Newcrest Mining (2.9%). The benchmark index ended the week 0.2% lower.