Global stocks record longest weekly losing streak since 2008 crisis

Global stocks rose on Friday but were on track for their longest streak of weekly losses since the 2008 financial crisis, as fears over inflation and an economic slowdown continued to stalk markets.

The FTSE All World index, which is on track for a 3.9 per cent fall this week in its sixth straight week of declines, gained 0.5 per cent.

The regional Stoxx Europe 600 index added 1.5 per cent. In Asia, Hong Kong’s Hang Seng index added 2.7 per cent and Japan’s Nikkei 225 closed 2.6 per cent higher.

Some investors characterised Friday’s gains as a bear market rally, referring to short periods of optimism within a longer trend of declines.

“Obviously there’s been a lot of difficult weeks and you get these sessions where the market tries to bounce back,” said Antoine Lesne, investment strategist at State Street’s SPDR exchange traded fund unit. “But I’m tempted to say we are still in bear market territory.”

Wall Street’s benchmark S&P 500 share index skirted a bear market — defined as a 20 per cent decline from a recent peak — on Thursday during a session of sharp intraday swings.

Futures trading implied the gauge would gain 1.4 per cent after the New York opening bell, while the tech-heavy Nasdaq 100 would rise 2 per cent. The broader Nasdaq Composite has fallen 27 per cent in the year to date.

Market sentiment had become “so bearishly positioned, wherever you look, that there is a good chance we see a rebound in weeks to come”, said Florian Ielpo, multi-asset portfolio manager at Lombard Odier.

“Will it be sustainable for the rest of the year? We strongly disagree with that,” he added. “There is only one way out of this inflationary period we are currently experiencing, and that is a slowdown in economic activity.”

US Federal Reserve chair Jay Powell warned on Thursday that bringing inflation down to its 2 per cent target may not be achieved without “some pain”. The Fed, whose monetary policy is followed by central banks worldwide, raised its main interest rate by 0.5 percentage points last week and is expected to increase it by the same amount in June, July and September.

Data on Wednesday showed US consumer price inflation rose at an annual pace of 8.3 per cent in April, staying close to a 40-year high of 8.5 per cent reached in the previous month.

A short-term rally in US government bonds also reversed on Friday as haven buying, driven by recession fears, reverted to traders calculating the effect of sustained inflation on fixed interest-paying securities.

The yield on the 10-year Treasury note, which moves inversely to the price of the benchmark debt security, rose 0.09 percentage points to 2.91 per cent.

US Treasuries, the world’s biggest financial market, have been volatile in recent weeks as investors stayed on the sidelines and dealers found it harder to match sellers with buyers.

The dollar index, which measures the greenback against six major currencies, slipped 0.1 per cent lower on Friday but remained around a 20-year high. Brent crude rose 1.5 per cent to $109.1 a barrel.