Global markets end volatile week on cautious note

A wild week in markets is ending on a subdued note, with Friday trading seeing light equity volumes and small moves across stocks, bonds and currencies, reports Bloomberg.

S&P 500 futures were little changed, indicating a muted open on Wall Street after US stocks came close to wiping out the week’s losses. European stocks are marginally positive on the week as investors hunted for bargains from the selloff. Treasury yields dipped and the dollar weakened. The VIX Index hovered around 23.

US stock markets roared back on Thursday as data showed fewer American filing for jobless benefits, which helped alleviate fears of a recession. The S&P 500 has narrowed its loss for the week to just 0.5 per cent. Investors will be waiting for next week’s data, which includes reports on US consumer inflation retail sales.

“Market volatility could remain elevated for some time,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. But “investors shouldn’t overreact to swings in market sentiment,” he said.

In premarket trading, Expedia Group Inc surged after posting better-than-expected second-quarter results. Paramount Global rose as much as 7.1 per cent after beating profit estimates.

Mixed signals from US central bank officials may prompt caution among investors. Federal Reserve Bank of Kansas City President Jeffrey Schmid indicated he’s not ready to support a reduction in interest rates with inflation above the target, according to comments made on Thursday in the US.

Boston Fed President Susan Collins, by contrast, said in an interview with the Providence Journal that the Fed could begin easing interest rates if inflation continues on its downward path amid a strong labor market.

Swap traders further trimmed bets on aggressive Fed easing in 2024. The global repricing has been so sharp that at one point interest-rate swaps implied a 60 per cent chance of an emergency rate cut by the Fed in the coming week -- well before its next scheduled meeting in September. Current pricing suggests about 40 basis points of cuts for September.“Scope for higher bond yields is limited as central banks may have realized it’s time to move back to more neutral settings,” said Martin van Vliet, a macro strategist at Robeco. “This scare will have reinforced the feeling among central banks that they need to take back the restrictiveness of monetary policy.” The Stoxx Europe 600 index climbed 0.5 per cent, led by real estate and miners. Hargreaves Lansdown Plc gained after a consortium including CVC and ADIA agreed to buy the investment manager in a GBP5.4 billion ($6.9 billion) deal.