Global stocks set for back-to-back weekly gains for the first time in 2022

A woman stands in front of a screen showing Japan’s Nikkei stock average, stock market indicators from the U.S. and other countries outside a brokerage house in Tokyo, Japan, on December 19, 2018. REUTERS/Issei Kato

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LONDON, March 25 (Reuters) – Global stocks are headed for a second consecutive week of gains for the first time in 2022, although sentiment was generally cautious as markets assessed the economic risks of the Federal Reserve tightening policy and Russia’s war in Ukraine.

Tech stocks in Hong Kong (.HSTECH) led the losers and weighed on the broader market after US regulators said recent media speculation about an impending deal that would prevent hundreds of Chinese companies from being delisted from US stock exchanges was “premature.” Read more

Despite this week’s preliminary global PMI data for March showing the global economy was generally resilient, investors have become increasingly bearish on the economic outlook. Barclays, for example, cut its global economic growth forecast this week to 3.3%, while traders raised short bets.

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Global bond markets were still in the midst of one of their worst sell-offs in recent memory, while market volatility indicators gave mixed signals. Nickel, the face of market volatility, was up 9% on Friday after hitting the 15% daily trading limit in the previous two sessions.

“I think the passing of quarter-end and fiscal year-end in Japan next week will give a clearer reading on the resilience of risk assets and currencies to the bond bear market and the prospect of an accelerated tightening of the Fed in May,” said Kenneth Broux, FX strategist at Societe Generale in London.

Benchmark 10-year US Treasury yields, which have led the overall bond market sell-off, stood at 2.34% on Friday after hitting a nearly three-year high above $2.41% this week. Yields have risen 75 basis points in the past two weeks as traders have scrambled to revise their rate hike expectations.

While Treasuries remained on track for one of their worst quarterly declines since at least the early 1970s, the dollar has benefited from the history of the widening interest rate spread with the Japanese yen falling briefly. to a late 2015 low of 122 yen to the dollar.

The broader dollar index took a breather on Friday but was on track for a small weekly gain.

Markets expect up to 190 rate hikes for the rest of the year after a 25bp hike in the US last week. Investors assign an 88% chance of a 50bp rate hike in March.

Chicago Fed President Charles Evans was the latest US policymaker to sound more aggressive, saying Thursday that the Fed needs to raise interest rates “at the right time” this year and in 2023. to curb high inflation before it becomes embedded in the US psychology and balances out. harder to get rid of. Read more

Demand for safe-haven assets, including gold and the Swiss franc, remained strong as the conflict in Ukraine showed no signs of slowing down. Ukrainian troops are retaking towns east of the capital, kyiv, and Russian forces that had been trying to seize the city are pulling back on their overextended supply lines. Read more

Spot gold remained high at $1,959 an ounce, steady on the day.

Overnight, the three major US stock indices each rose more than 1% as investors bought battered shares of chipmakers and big-growth names, supported by a drop in oil prices.

Oil continued to slide a bit on Friday as the United States and its allies considered releasing more stored oil to cool markets. Brent crude fell 1.3% to $117.78 a barrel and US crude fell 1.6% to $110 a barrel, but prices were still very high by historical standards.

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Information from Saikat Chatterjee; additional reporting by Alun John in Hong Kong; Edited by Raissa Kasolowsky

Our standards: The Thomson Reuters Trust Principles.

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