The FTSE All-World index of large-cap stocks rose 1.4% on Friday, but was on track to end the week 1.7% lower, its worst performance in nearly three months.
On Wall Street, the S&P 500 Index was up 1.3% at lunchtime in New York City, but remained on track for its biggest drop since February after hitting an all-time high last Friday. The highly technological Nasdaq Composite index climbed 2%, but was still 2.6% lower for the week.
Data on Wednesday showed U.S. inflation rose 4.2% year-on-year in April, pushing down stocks around the world as fears grew that the Federal Reserve would step in to prevent overheating from overheating. economy by tightening borrowing costs.
Fed policymakers have said inflation jerks are likely to be transient as the effects of last year’s foreclosure restrictions trickle down to the economy.
“We need to be patient, steel-eyed central bankers, and not be fooled by temporary surprises in the data,” Fed Governor Christopher Waller said this week.
A partial recovery in global equity markets on Thursday and Friday showed investors that “buying dips is the right strategy because it has served them very well over the past year,” said Sunil Krishnan, head of multi funds. -assets at Aviva Investors. “If you believe what policymakers are saying, then this is the right thing to do.”
However, if inflation “isn’t that far below 3% a year from now, you can’t escape the gravitational pull on real purchasing power for too long,” he warned.
The University of Michigan’s monthly consumer sentiment survey on Friday showed households expected inflation to hit 4.6% this year, down from 3.4% when asked in April. A college-produced sentiment index also fell to 82.8 in May, from 88.3 in April.
US Treasuries, which have risen in price over the past two sessions in New York City after investors ignored the nervousness of inflation, continued to rally on Friday.
The benchmark 10-year Treasury yield, which moves inversely to its price, fell 0.02 percentage point to 1.65%.
In Europe, the Stoxx 600 regional stock index closed up 1.2%, capping a volatile week with a loss of 0.5%.
Kasper Elmgreen, head of equities at Amundi, said he was “cautious” about the stock market in the near term because much of the developed world recovery from the coronavirus was already embedded in stock valuations.
“After we’ve all had our first haircut and our first pint inside, what happens next?” he said, noting that China’s early economic rebound from the pandemic was followed by a stock market correction in late March, as traders cashed in the gains and anticipated inflation.
The dollar index, which measures the greenback against a basket of major currencies, fell 0.4 percent after U.S. retail sales growth unexpectedly came to a halt in April. The euro rose 0.5 percent against the dollar to buy $ 1.2143. The British pound rose 0.3% to $ 1.4094.
Brent, the international oil marker, climbed 2.3% to $ 68.57 a barrel.