admin
Global stocks extended gains on Friday as China’s easing of quarantine rules added fuel to the rally that began on Wall Street after slower-than-projected US inflation data.
US and European equity futures rose and a benchmark of Asian equities headed for the biggest jump in more than two years. A gauge of Hong Kong-listed technology stocks surged more than 10% as the shift in quarantine came hot on heels of a call by leaders in Beijing for more precise and targeted virus control measures.
A Bloomberg gauge of the greenback resumed declines Friday, adding to a 2 percent slide on Thursday that was the biggest move since 2009.
Government bonds rallied in Japan and Australia after Treasuries surged on Thursday in move that sent yields down by 20 to 30 basis points across the US curve. Rates traders downgraded the odds of another three-quarter-point rate increase by the Federal Reserve in December almost to nil.
Cryptocurrency prices retreated Friday as the knock-on effects from FTX’s downfall persisted, even as other risk assets surged after US inflation data.
Headline US inflation came in at 7,7 percent, the lowest since January, before Russia’s war in Ukraine pushed up commodity prices. More important for the Fed, the core measure that excludes food and energy slowed more than anticipated.
“Touch wood, we can kiss 75-basis-point hikes goodbye as long as incoming data allows, but with inflation likely to remain elevated, I suspect we’ll see rates above 5 percent next year,” said Matthew Simpson, senior market analyst at StoneX Financial. “And the Fed will want more data before hinting at a lower terminal rate, even if markets behaved like rates were cut overnight.”
Still, Thursday’s intense rally only partially claws back steep losses for risk assets hammered this year by the Fed’s tightening. The S&P 500 is still down 17 percent and the Nasdaq 100 is off nearly 30 percent, with both headed for their worst years since 2008. The MSCI World Index is down about 18 percent this year.
Fed officials appeared to back a downshift in rate hikes after a stretch of four jumbo-sized increases. They also stressed the need for policy to remain tight. Dallas Fed President Lorie Logan said it may soon be appropriate to slow the pace to better assess economic conditions. San Francisco’s Mary Daly said the moderation was “good news,” but noted “pausing is not the discussion, the discussion is stepping down.” – Bloomberg
Online Reporter