Global markets continue rebound as US stocks notch biggest weekly gains since 2020

Global stock markets continued their rebound and closed broadly higher on Friday, with Wall Street notching their biggest weekly gain in 16 months.

The S&P 500 rose for the fourth straight day, adding 1.2 per cent to a streak that included back-to-back days with gains of 2 per cent. The Dow Jones Industrial Average rose 0.8 per cent, while the Nasdaq composite rose 2 per cent. The three Wall Street indices each had their best week since November 2020.

In Europe, London's FTSE 100 closed up 0.3 per cent, Frankfurt's DAX rose 0.2 per cent and Paris' CAC 40 inched up 0.1 per cent. In Asia, Tokyo's Nikkei 225 rose 0.7 per cent and the Shanghai Composite climbed 1.1 per cent, while Hong Kong's Hang Seng dropped 0.4 per cent at the close.

This week's market rally came as Wall Street drew encouragement from the Federal Reserve, which announced its first interest rate hike since 2018 and signalled several more to come.

The move, which had been widely expected for months by the market, sends a message that the central bank is focused on fighting the highest inflation in decades. Fed chairman Jerome Powell also stressed confidence that the economy is strong enough to withstand higher interest rates.

The Fed’s action and economic outlook helped to give markets a better sense of what to expect going forward, said Bill Northey, senior investment director at US Bank Wealth Management.

“This resulted, to a certain extent, in a relief in the stock market that has ridden that over the course of the past several days,” he said.

But analysts say the surge on Wall Street reflected bargain hunting after a grim start to the week.

"No one is going to step in front of the train," Briefing.com analyst Patrick O'Hare said. "It's undeniably a really good week," he said, adding that he nonetheless expects more volatility ahead.

Stocks also got a boost as the price of US crude oil, which briefly topped $130 a barrel last week amid concerns that the conflict in Ukraine will squeeze energy markets, eased briefly below $94 a barrel on Wednesday and has since been hovering below $110 a barrel.

Oil prices have been extremely volatile the past few weeks but were relatively stable on Friday. Brent, the international standard, settled at $107.93 per barrel, while West Texas Intermediate, the US benchmark, closed at $104.70 per barrel.

Safe-haven gold was on track for its biggest weekly drop in nearly four months, in the wake of the Fed interest rate hike and a rebound in the US dollar. Spot gold dropped 1.2 per cent to $1,919.36 an ounce, while US gold futures fell 0.33 per cent to $1,928.20 an ounce.

The US dollar index bounced back from recent declines as Federal Reserve officials said the central bank may need to be more aggressive to deal with inflation, while the dollar hit a fresh six-year high against the yen.

The dollar index rose 0.269 per cent, with the euro down 0.38 per cent to $1.1047.

Russia’s military offensive in Ukraine has weighed heavily on markets as investors try to gauge how the conflict could impact global economic growth. Markets in Europe have been particularly sensitive.

High energy prices are only adding to worries about inflation and whether the squeeze on consumers will eventually crimp spending and economic growth.

On Wall Street, technology and communication stocks, retailers, automakers and other companies that rely on consumer spending helped lift the market. Chipmaker Nvidia climbed 6.8 per cent, Facebook parent Meta rose 4.2 per cent and Tesla rose 3.9 per cent. Only utilities stocks fell.