Wall Street was one of the few global markets that closed in the green on Friday. The US indices rebounded after negative sentiment, caused by lacklustre Treasury auction and dovish remarks from US Federal Reserve (Fed) officials, the previous day. On Thursday Fed Chair Jerome Powell warned that the victory over the inflation battle wasn’t over yet. Leading the gains was the tech-heavy Nasdaq, which saw a 2% increase on Friday after Treasury yields stabilised. Gains were, however, capped by a Moody’s downgrade on the country’s credit rating, following “an increase in debt servicing expenses and the presence of entrenched political polarisation,” Reuters reported. For the week, the S&P 500 rose 1.10%, the Nasdaq gained 2% while the Dow Jones added 0.60%.
European markets fell on Friday as hawkish commentary from Fed officials dashed hopes that the central bank has wrapped up its interest-rate hike campaign, while disappointing earnings from Diageo (LON:DGE) and Richemont (JO:CFRJ) also weighed on sentiment. Most markets faltered last week as more companies missed earnings projections and warned of weaker full-year profitability. The FTSE 100 and the CAC 40 lost about 9% and 0.50% respectively for the week, while the STOXX 600 performed slightly better.
Asian markets were downbeat on Friday as stocks across the region fell, taking cues from Thursday’s selloff on Wall Street combined with worries over China's economy. All eyes are now on crucial US inflation data due on Tuesday. The Hang Seng shed 1.80% on Friday, while the Shanghai Composite and the Nikkei lost 0.50% and 0.20%, respectively.
The FTSE/JSE All Share Index (ALSI) was not spared from the global slump, falling 1.15% on Friday, its lowest level in over a week, as market participants assessed hawkish comments from major central banks. Market participants also continued to monitor the influx of economic data from several economies and corporate earnings. For the week, the ALSI trimmed about 2%. The rand fell for the sixth consecutive session as rate hike jitters and new global growth concerns weighed on risk appetite. “South African Reserve Bank Governor Lesetja Kganyago has repeatedly emphasised that the central bank's battle against inflation is not yet over as risks to the inflation outlook remain skewed to the upside. He said recently the central bank won’t hesitate to do what’s needed to preserve price stability,” Trading Economics added.
Oil prices climbed on Friday but were set for a weekly decline as demand continued to drop. Trading Economics reported that “concerns about potential supply disruptions in the Middle East, coupled with uncertainties in US and Chinese demand contributed to the week's downward pressure. The latest data also showed that US crude inventories surged by nearly 12 million barrels last week. In China, weaker-than-expected inflation and trade figures hurt the demand outlook in the world’s top crude importer.” All eyes are now on the upcoming OPEC+ meeting later this month which will determine the group's next move on output.
Gold prices were set to fall for the second week in a row, driven down by a stronger US dollar and rising Treasury yields following Powell's hawkish remarks. Spot gold was trading at $1 959.74/oz by 20h30 on Friday, while US gold futures fell 0.30% to $1 964.50.
