Uncertain trade seen persisting
After four or five days of down markets, investors probably feel that most of the bad news is already out and perhaps the selling was overdone
Stock markets face the week with uncertainty after rebounding on Friday following a rocky week dominated by uncertainty over whether the global economy will suffer recession this year as central bankers continue to address inflation.
Major indices in New York, which have been under pressure most of this week, enjoyed a buoyant session, led by tech shares following strong Netflix subscription figures.
The streaming giant reported lower quarterly profits, but Netflix shares surged 8.5 percent after subscriber figures topped analyst estimates, as hits such as “Wednesday” and “Harry & Meghan” drew in new viewers.
Analysts also cited comments from Federal Reserve Governor Christopher Waller endorsing a 25-basis point interest increase at the Fed’s next meeting, smaller than other recent hikes.
“After four or five days of down markets, investors probably feel that most of the bad news is already out and perhaps the selling was overdone,” said Jack Ablin of Cresset Capital.
All three major US indices rose, with the Nasdaq leading with a 2.7 percent jump.
The gains in New York followed earlier up sessions in Asia and Europe.
Profit taking mood
“Having seen such a strong start to the year, there was always the probability that we’d see a little bit of profit taking,” said market analyst Michael Hewson at CMC Markets.
“However, that doesn’t mean that the ... optimism that has been the hallmark of this early year rebound is evaporating, and that we might start to see a sharp move lower.”
On currency markets, the yen retreated against the dollar, even as data showed Japanese inflation hit a four-decade high.
Analysts are not convinced that despite rising prices, the Bank of Japan will start to raise interest rates.
Oil prices meanwhile extended Thursday’s gains as investors focused on the recovery in demand from China. Suggestions that the country’s Covid infections may have peaked added to the optimism among commodity traders.
“The overarching concerns of a global slowdown remain, even though ... investors are still pinning their hopes on a significant boost from the reopening in China,” noted Richard Hunter, head of markets at Interactive Investor.