The bounce, extending a late recovery in the prior session, interrupted a three-day rout for stocks globally, amid market jitters over accelerating US inflation.
US stocks opened higher on Friday with broad-based gains as investors looked to economic recovery prospects after worries about rising inflation sparked a volatile week of trading. The Dow Jones Industrial Average rose 29.41 points, or 0.09 percent, at the open to 34,050.86. The S&P 500 opened higher by 17.08 points, or 0.42 percent, at 4,129.58, while the Nasdaq Composite gained 130.66 points, or 1.00 percent, to 13,255.65 at the opening bell.

The MSCI World Index, a broad gauge of equity markets globally, was up 0.4 percent in early European trading, adding to Thursday’s 0.4 percent gains after a loss of more than 4 percent since the start of the week.

The STOXX Europe 600 Index was up 0.3 percent at 0827 GMT, giving back some of its early gains, while the FTSE 100, Europe’s biggest index, was up 0.6 percent.

The gains followed overnight strength in Asia, where Tokyo’s Nikkei jumped 2.3 percent, while MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.8 percent and Chinese blue chips rose 2.4 percent.

US stock futures pointed to a higher open on Wall Street, with S&P 500 futures up 0.5 percent and its Nasdaq peer up 0.8 percent.

After a higher than expected inflation print had spooked markets earlier in the week, Fed official Christopher Waller signalled overnight that rates would not rise until policymakers either see inflation above target for a long time or excessively high inflation.

“From 2004 to 2008 the Fed raised rates from 1 to 5.25 percent. However, the massive public and private debt levels limit the Fed in how much interest rates can increase this time without too much damage to the overall economy,” said Louise Dudley, Global Equities Portfolio Manager, at the international business of Federated Hermes.

With so-called ‘growth’ stocks, those expected to post higher-than-average returns, trading on higher valuations than their more staid peers, Dudley said now was the time to change tack.

“Stocks with more attractive valuations and slower growth will do well in a higher interest rate environment. Investors will do well focusing on valuation this year even if interest rates do not surprise on the upside.”

Looking ahead, traders will wait for the release of a fresh batch of US data including April retail sales, industrial production and capacity utilisation, while the Dallas Federal Reserve President is also set to speak.

In Europe, meanwhile, the European Central Bank is set to publish the accounts of its April meeting.

Benchmark 10-year Treasury yields were down fell by nearly 4 basis points overnight and eased further to trade at 1.6420 percent.

After holding steady in Asia overnight, the US currency extended losses against a basket of its major peers, with the dollar index down 0.3 percent at 90.46, taking a breather after recent strong gains.

“Treasury yields are higher this week, but only by 5bp, which is less of a rise than in Europe, and a pretty modest reaction to the CPI data,” Societe Generale analyst Kit Juckes said in a note.

“Either the US inflation uptick is temporary, or the Fed is dangerously complacent. Either way, we’re going to see tolerance of higher inflation tested further in the months ahead.”

Bitcoin Bounce

Gold extended gains to trade up 0.5 percent at US$1,834 an ounce, helped by the pullback in the dollar.

Oil prices hovered around flat on the day as investors focused on high coronavirus cases in key consumer India and the return to action of a top US fuel pipeline network after being shut due to a cyber attack.

Brent crude was down 0.1 percent at US$66.99 a barrel, while US West Texas Intermediate crude was up 0.1 percent at US$63.87 a barrel.

In cryptocurrencies, bitcoin recovered to trade just above US$50,000 on Friday, after plunging to a 2-1/2-month low of US$45,700 in the previous session when a media report of a regulatory probe into crypto exchange Binance added to pressure from Tesla Inc chief Elon Musk reversing his stance on accepting the digital currency.