US stocks rose higher on Friday after trading a volatile week in which fears of the coming recession and persistently high interest rates resurfaced to lose investors’ appetite for risk.
Wall Street’s blue-chip S&P 500 gained 0.3 percent and the tech-heavy Nasdaq Composite rose 0.5 percent in early New York trading.
Shares in Google parent Alphabet rose 3.2 percent after the group said it would lay off 12,000 staff, or about 6 percent of its total workforce, while better-than-expected customer numbers sent shares in Netflix up more than 8 percent despite being the founder. Reed Hastings announced his departure as chief executive.
Equity market moves came after European Central Bank president Christine Lagarde and Federal Reserve vice-chairman Lael Brainard both pledged to “remain firm” on interest rate hikes, signaling to markets that borrowing costs will not fall. Signs of slowing U.S. economic growth have dampened investor confidence, dragging down equity markets that made a relatively strong start to the year.
“Over the past two months, equities and bonds have cheered early signs of disinflation and softening growth, as they reinforce the peak rate narrative,” said analysts at Barclays. “But ‘bad data is good news for equities’ is now evident in the US.”
“In contrast, Europe appears to be in the sweet spot right now,” the bank added. “Expectations of disinflation have pushed yields lower despite a hawkish ECB, and improving economic sentiment as falling energy prices and the reopening of China have pushed equities.”
Wall Street stocks are out of favor, with global fund managers cutting their allocations to the US stock market to the lowest level in 17 years, according to a closely watched Bank of America survey this week. After several years, European stocks and emerging markets are back in fashion.
Hong Kong’s Hang Seng index and China’s CSI 300 have risen 50 percent and 20 percent since early November as Beijing has reversed its strict zero-Covid policy since early 2020. The index rose 1.8 percent and 0.6 percent, respectively, on Friday.
In Europe, the regional Stoxx 600 added 0.3 percent, Germany’s Dax rose 0.4 percent and London’s FTSE 100 gained 0.1 percent.
Elsewhere, Brent crude, the international oil benchmark, rose 0.1 percent to $86.18 a barrel. A measure of the strength of the dollar against the basket of six peers rose 0.4 percent, although the currency has declined more than 8 percent over the past three months.
US government bonds came under pressure, meanwhile, with the yield on the benchmark 10-year Treasury rising 0.06 percentage points to 3.45 percent, down from a peak of 4.24 percent in late October. Bond yields move inversely to prices.