US stocks hit new highs for the year on Friday, leading global stocks to gain this week as mounting bets that the Federal Reserve will skip a rate hike next week overshadowed concerns that US markets would run out of cash.
Aided by a surge from Tesla Inc, which rose as much as 5.7%, the S&P 500 surged to levels last seen in August before retreating by midday to be little changed. The Nasdaq Composite and Dow Jones Industrial Average also reversed previous gains to remain flat.
In Europe, the STOXX 600 index lost 0.13%, but MSCI’s broadest index of Asia-Pacific stocks outside of Japan rose 0.74% overnight. Combined with gains on Wall Street, the MSCI’s broadest index of world stocks rose 0.14% to stay below its 13-month high. For the week, the world stocks index could post a 0.4% increase.
“As of today, the S&P 500 is back in a bull market,” said Arthur Hogan, chief market strategist at Briley Wealth, noting that the index ended Thursday with a 20% gain from its recent lows. above the apple cart is an overly aggressive Fed.”
Data from Refinitiv showed that the S&P 500 was up 20% from its October 12 low. The most commonly accepted definition of a bull market is a 20% rise from a low and a 20% fall from a high for a bear market, but that is open to interpretation.
Traders are now betting 73% on the Fed holding rates steady on June 14, in a range of 5%-5.25%, interrupting the most aggressive cycle of hikes since the 1980s.
Bets on a pause were supported on Thursday by data showing the number of Americans filing new jobless claims rose to a high in more than 1 1/2 years, pointing to an easing in the labor market that could further suppress inflation.
Investors are also hoping that the Fed will pause its rate hike campaign as a quirk of US debt ceiling negotiations poses a potential threat to market liquidity.
The US government is expected to scramble to sell short-term debt to replenish its Treasury General Account (TGA), possibly at yields so high that banks raise deposit rates to compete for funding, spurring interest in riskier assets like stocks. decreases.
“We’re all concerned about liquidity,” said Ben Jones, director of macro research at Invesco. The Fed, he added, “still wants to tighten policy” and may therefore allow the rebuilding of the TGA to drain liquidity from markets without intervening. provide other support resources.
However, this fear did not dominate trading on Friday.
Fed Chairman Jerome Powell said on May 19 that it is still unclear whether US interest rates will have to rise further, and that the risks of overtightening or overtightening have become more balanced.
Uncertainty about the outlook for US interest rates supported government bond yields.
The yield on two-year government bonds, which are highly sensitive to monetary policy expectations, rose 7 basis points to 4.589%, while the yield on the benchmark 10-year US10YT=RR bond rose 3.9 basis points to 3.753%. [US/]
The US dollar index, which measures the performance of the US currency against six others, recovered 0.21% to 103.47.
The euro fell 0.32% to $1.0748, just short of Thursday’s two-week high of $1.0787. [USD/]
Elsewhere, the Turkish lira hit a new overnight low of 23.54 per dollar, even as President Tayyip Erdogan’s appointment of a US banker as head of the central bank sent a strong signal for a return to a more orthodox policy.
Erdogan reinstated highly regarded former finance minister Mehmet Simsek last week. Simsek said this week that the guiding principles for the economy would be transparency, consistency, accountability and predictability.
Leading crypto asset bitcoin fell 0.2% to $26,648 after crypto exchange Binance said it was suspending dollar deposits and would soon suspend fiat currency withdrawal channels following a crackdown from the US Securities and Exchange Commission.
Crude oil rose slightly, but gains were dampened by reports that the United States and Iran were close to a nuclear deal, though denials from both sides held it off the lows of the previous session.
The prospect of a deal, which reportedly included room for an additional 1 million barrels per day of Iranian supply, initially sent crude oil prices tumbling.
Brent crude oil futures fell as much as 0.9% at one point before changing course to last trade flat at $76.00 a barrel. West Texas Intermediate crude was also stable at $71.28 a barrel. [O/R]
(This story has not been edited by News18 staff and was published from a syndicated news agency feed – Reuters)