LONDON – World shares rose on Friday, at the end of a month that will be the benchmark’s worst in two years, as a slight pullback in the dollar from 20-year highs offered relief to battered markets.
Asian shares enjoyed their best day in six weeks, led by Chinese tech stocks, while MSCI’s global equity index rose for the second day and European bourses opened firmer .
While the moves gave investors a much-needed respite from worries of a global economic slowdown, inflation and the conflict in Ukraine, it has been a torrid month for riskier assets from equities to emerging markets. World stocks have lost 5.8 percent so far in April, their worst month since March 2020.
A 5 percent rise in the dollar’s index, its biggest monthly rise in seven years, has meanwhile pummelled other currencies, with the yen the worst loser, touching two-decade lows.
The dollar eased 0.6 percent on Friday, however, snapping a four-day streak of gains against a basket of currencies.
“Perhaps the dollar crescendo has peaked,” Colin Asher, senior economist at Mizuho, said, noting that aggressive interest rate hikes from the US Federal Reserve had already been priced in and there was “some two-way risk on whether the Fed actually makes good on what’s priced.”
Markets expect 150 basis points of rate hikes in the next three Fed meetings, far outpacing other global central banks.
Those bets were not derailed by Thursday data showing the US economy shrank in the first 2022 quarter, though the figures underscored the risks to growth posed by tighter monetary policy.
“If they tighten as much as is priced in, you will get no (US) growth by the end of this year,” Asher added.
A strong Wall Street after robust earnings from Facebook parent Meta Platforms had helped drive the Nasdaq 3 percent higher overnight.
However, Nasdaq futures were down 0.7 percent, pressured by disappointing earnings from Amazon after the market closed. Frankfurt-listed Amazon shares fell 8 percent.
Longer term fears
The earnings season so far has been healthy, with most companies beating estimates, but worries are growing that high input costs and a slowing global economy will crimp the outlook.
The benchmark 10-year yield slipped 2.4 percent to 2.84 percent, having reached as high as 2.981 percent on April 20 and set to complete a five-month streak of gains.
In Europe too, government bond yields slipped despite above-forecast French inflation figures that on the heels of sharply higher German print the day before
As the dollar index slipped, other currencies firmed, with the euro up 0.6 percent at $1.0568, having fallen under the $1.05 level on Thursday for the first time since 2017.
The yen which swept past the key psychological 130 yen level on Thursday, clawed back 0.75 percent at 129.9.