Global stocks hold on to weekly gains, but the risks remain: the report

War, inflation and oil stocks have risen as profits have warned

Global conditions held up weekly gains on Friday, but a dramatic cocktail of rising interest rates, high oil prices and the endless end of the Ukrainian war held the rebound as the gains sent a warning signal to the economy.

The MSCI global stock index was flat at 695 points, up 5.4 percent on the week, but well below its January high of 761.21 on January 4.

“The sentiment is still pretty cautious, it’s looking for a reason to rally, but it’s struggling to find something with a strong conviction,” said Seema Shah, chief strategist at Principal Global Investors.

In Europe, the STOXX index of 600 major companies changed slightly by 450 points, down 9% from its highest in life since the beginning of January.

The U.S. Federal Reserve finally began a series of interest rate hikes on Wednesday, and from now on it was time to see how the economy evolves and high inflation before it reaches its peak, Shah said.

Oil prices remained above $ 100 a barrel after poor progress in peace talks between Russia and Ukraine sparked a spectrum of tougher sanctions and a crude supply of crude supplies.

“I suspect the conflict will continue to boil in the background, and as a result, you’ll probably see oil prices continue to be high,” Shah said.

Adding to the mix, U.S. President Joe Biden is expected to issue a warning that Beijing will pay the price if it accepts Russia’s war effort when it talks with Chinese President Xi Jinping in a scheduled call for 1300 GMT.

The first failure of Russian foreign bonds since the Bolshevik revolution, however, seems to have been avoided for the time being. Sources say some creditors have received payment of Russian bond coupons due this week in dollars.

In Asia, the MSCI Asia-Pacific equities index outside Japan fell 0.15 percent, while Hong Kong’s Hang Seng maintained a two-day high. Japan’s Nikkei rose 0.6 percent.

The impact of port inflation and supply chain disruptions in China as a result of rising COVID infections is likely to be massively forgotten by markets, said Michael Hewson, chief market analyst at CMC Markets.

“That’s going to be a headwind with ratings and even though we’re getting a pretty decent rebound at the moment, it’s really costing me to see if we can move above the top we’ve seen this year,” Mr. Hewson said.

The S&P 500 futures fell 0.55 percent, with little big data ahead of Wall Street’s initial bell.

Yield Investment Alert

Problems with political leaders who are experiencing rising inflation and rising economies were highlighted at a number of central bank meetings this week.

The Fed raised rates for more than three years for the first time on Wednesday, and surprised traders with a tidier-than-expected forecast. The Bank of England also climbed, but was surprised by a dovish outlook that prompted the rally of gilts.

The Bank of Japan offered no surprises on Friday, leaving the policy ultra easy, which has put a lot of pressure on the yen.

Meanwhile, the gap between U.S. Treasury yields of two to 10-year yields is nearing its narrowest level since March 2020, when economies were hit by the onset of COVID blockades.

A narrower gap means that the performance curve is not far from reversing, a reliable indicator of a likely recession in the next year or two.

The benchmark 10-year Treasury yield was last at 2.1655 percent.

Oil, which fell 30% from last week’s peak, has been hit hard by bouncing traders because there is no concern for peace in Ukraine. Crude Brent futures rose 1.3 percent last time and at $ 108, they added more than $ 10 a barrel in two sessions.

“It is very difficult to gain confidence that you will be able to get goods out of Russia or Ukraine reliably,” said Tobin Gorey, a commodity strategist at the Commonwealth Bank of Australia in Sydney. “You’re going to look elsewhere and that tends to drive up the price.”

Wheat and corn futures, which are sensitive to supply disruptions in the Black Sea, have risen sharply.

The Japanese currency has been at a six-year low this week and last sold at $ 118.83 each. “The next multi-session target could be a psychological 120.00 level,” said Terence Wu, a strategist at OCBC Bank in Singapore.

The euro stood at $ 1.106, down 0.3 percent on the day. Spot gold stood at $ 1,935, down 0.5 percent, and bitcoin was holding more than $ 40,000, down 0.7 percent.

(This story was not edited by NDTV staff and was automatically created from a union feed.)

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