Stock Futures Rise as Volatile Trading Persists

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Investors showed preference for safe-haven assets, including dollars and US government bonds

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Stock indices ended the week with sharp losses as investors tried to gauge inflation, the reaction of central banks and the outlook for the global economy. The Federal Reserve earlier this week approved the biggest interest rate hike since 1994 and indicated it would continue to raise rates this year at the fastest pace in decades to fight inflation.

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Recent rate hikes have reversed an earlier cycle of monetary policy loosening that has allowed both stock and bond prices to rise in recent years. The prospect of repeated rate hikes throughout the year has caused investors to sell both properties and raised fears that rapid hardening could stifle growth. US mortgage rates recently reached their highest level in more than 13 years. The most recent economic data report shows a sharp decline in key sectors.

“The central banks, who have been our friends for a very long time, are telling us that we should expect pain,” said Honey Redha, portfolio manager at Pinebridge Investments. “Inflation numbers are the only thing that matters right now. Even if we see growth very slow, it won’t be enough to get the Fed to change course.”

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Mr. Redha said it is possible that inflation may climb further in the coming months as energy prices remain high. Brent crude, the international benchmark for oil prices, rose 0.9% to $120.86 a barrel.

European natural-gas prices rose 4.5% on Friday, giving them a rise of more than 55% for the week. Moscow’s move to slash natural gas exports to Europe this week has thrown the continent’s energy crisis into a dangerous new phase, which threatens to wipe out vital fuel supplies and suffocate the continent’s economy.

Signs remained that investors sought safer assets such as the US dollar and US government bonds. The Businesshala Dollar Index, which measures the greenback against a basket of 16 currencies, rose 0.5%. In bond markets, the yield on the benchmark 10-year Treasury declined to 3.212% from 3.303% on Thursday. Yields fall when prices rise.

The overseas, pan-continental stock Europe 600 gained 1.1%. Shares of commodity mining and trading giant Glencore rose 2.3% in London trading after the company raised price and cost guidance for its coal operations and said its trading business was performing better than expectations.

In Asia, the Bank of Japan maintained ultralow interest rates on Friday, confirming that it would not join the Federal Reserve and other major global central banks in tightening monetary policy. Japan’s Nikkei 225 stock index fell 1.8% and the Japanese yen fell 2% against the dollar.

South Korea’s Kospi fell 0.4%, while China’s Shanghai Composite was down 1%.

Write to Caitlin Ostroff at [email protected]

Credit: www.Businesshala.com /

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