Shares of European and Asian stocks rose on Friday after the chairman of the US Federal Reserve discussed the possibility of using a very large rate hike to curb inflation.
The Stoxx Europe 600 regional index added 0.6 in early deals, while London’s FTSE 100 rose 0.8 percent. In Asia, the Hong Kong Hang Seng index added 2.4 percent, and the Nikkei 225 in Tokyo also closed at 2.6 percent.
Despite gains on Friday, global stocks were on track to fall for the sixth week in a row due to fears about rising cost of living in the west and a slowdown in China’s economy.
Concerns are also haunting markets about the Federal Reserve, whose monetary policy is being pursued by central banks around the world, using a grand rate increase of 0.75 percentage points to fight inflation but causing a recession in the process.
In an interview with Marketplace on Thursday night, however, Fed Chairman Jay Powell said it would be “appropriate for the next two meetings to have an additional increase of 50 basis points” if the economy “works about as expected”.
Powell’s comments “supported the risk appetite,” said Deutsche Bank strategist Jim Reid, reducing fears that the Fed would collapse to 75 bp. [this week’s] stronger than expected, the testimony of the CPI.
Data for Wednesday showed In April, U.S. consumer price inflation rose at an annual rate of 8.3 percent, stubbornly remaining close to the 40-year high of 8.5 percent reached the previous month.
The recent rally in U.S. government bonds also canceled on Friday, when shelter purchases sparked by recession fears disappeared. Yields on 10-year Treasury bonds, which are moving back to the value of the reference debt paper, rose 0.07 percentage points to 2.89 percent.
Futures markets expected the Nasdaq 100 stock index on Wall Street to rise 1.3 percent in early trades.
Contracts tracking the broad S&P 500, which nearly entered the bear market on Thursday, defined as 20 percent below its recent peak, rose 0.9 percent.