Global stocks were on course for their most significant weekly increase in a year, as investors celebrated a pause in US interest rate hikes, while the US dollar was under pressure.
Friday’s trading activity was relatively calm as investors awaited crucial US employment data later in the day.
The MSCI World stock index has climbed 4.3% since Monday, marking its most substantial weekly gain since November 2022. The index was up by 0.23% on that day.
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Europe’s key Stoxx 600 equity index showed a 0.16% increase on Friday and was headed for a weekly rise of 3.4%, the most significant increase since March. Germany’s DAX rose by 0.18%, and the UK’s FTSE 100 also increased by the same margin.
The stock market rally was triggered by a drop in bond yields after the Federal Reserve kept interest rates unchanged for the second consecutive meeting on Wednesday, and the Bank of England followed suit on Thursday.
Central bank officials emphasized the need to address inflation, but many investors believe the next move in borrowing costs will likely be a decrease.
Samuel Zief, head of global FX strategy at JPMorgan Private Bank, noted, “From what we’ve heard from almost all major central banks over the past week, it appears they are all adopting a ‘wait and see’ approach.” The European Central Bank held its rates steady last week. “Once the market becomes convinced that these central banks are on hold, it could lead to a decrease in bond yields.”
The 10-year US Treasury yield, which serves as a reference for global borrowing rates, dropped by 20 basis points over Wednesday and Thursday, now down about 36 basis points from the 16-year high it reached last week, which was above 5%. On Friday, the yield, which moves inversely to its price, remained unchanged at 4.666%.
A decision by the US Treasury on Wednesday to issue less long-term debt than expected and Thursday’s data suggesting a cooling US economy further bolstered the bond rally.
The US dollar index was down by 0.16% on Friday and was set to decrease by 0.49% for the week, primarily due to lower US yields. The euro increased by 0.15% to $1.064 and was poised for a 0.69% weekly gain.
US S&P 500 stock index futures showed a 0.2% decline on Friday, indicating a slight decrease in the opening compared to the previous day’s 1.9% jump.
Apple’s Frankfurt-listed shares declined by 2.3% after the company’s sales forecast for the holiday quarter fell short of Wall Street expectations. In pre-market US trading, it was down by approximately 3%.
Investor attention on Friday turned to the US nonfarm payrolls data scheduled for release at 12:30 GMT. Economists expected the US economy to have added 180,000 jobs in October, following a robust increase of 336,000 in September.
Goldman Sachs’ chief economist, Jan Hatzius, stated in a note to clients that the bank anticipated payrolls to have risen by 195,000, despite a 30,000-job setback resulting from autoworker strikes.
Oil prices for the week were slightly lower, partly because the Israel-Hamas conflict did not escalate as some had feared. Brent crude oil futures were down 3.8% since Monday, trading at $87.04 per barrel, while US crude traded at $82.67 per barrel, with both showing a slight increase on Friday.
