NEW YORK – Global equity markets rose while US Treasury yields fell as investors tempered their expectations of the scale of the Federal Reserve’s interest rate raising cycle as falling oil prices helped to cool inflation.
Market sentiment has been buoyed by US Labor Department data this week showing a slowdown in consumer and producer prices in July following a series of interest rate hikes by the Fed.
“With inflation now backing off, all the managers who stayed in cash and didn’t believe we could move off the June lows are now being forced back into the market,” said Thomas Hayes, chairman at Great Hill Capital.
The MSCI world equity index, which tracks shares in 50 countries, was up 1.1 percent. The pan-European STOXX 600 index gained 0.16 percent.
US Treasury yields were down as traders weighed a likely moderation of the Fed’s monetary policy stance. Benchmark 10-year note yields dipped to 2.8385 percent, after reaching 2.902 percent on Thursday, the highest since July 22.
“With inflation coming down, consumer confidence is going to be coming back, and employment is still strong, you could see a situation where the market has stabilized and the economic numbers continue to slow based on the lag effect of the Fed tightening that has already happened,” Hayes added.
All three main Wall Street indexes ended higher, making it the fourth straight week of gains, driven by stocks in technology, healthcare, communication services, consumer discretionary and financials.
The Dow Jones Industrial Average rose 1.27 percent to 33,761.05, while the S&P 500 gained 1.73 percent to 4,280.15 and the Nasdaq Composite added 2.09 percent to 13,047.19. – Reuters
