Global stocks were on course for their first weekly rise this month, as traders questioned whether an economic slowdown would temper central banks’ plans for aggressive monetary policy tightening.
The FTSE All-World index of developed and emerging market shares had registered a weekly gain of 2.4 per cent by Friday morning in London, having not ended a week on a positive note since late May.
Europe’s regional Stoxx 600 share gauge added 0.5 per cent in early dealings, while futures trading implied Wall Street’s blue-chip S&P 500 and the technology-focused Nasdaq 100 would turn higher later in the day. Hong Kong’s Hang Seng index rose 2 per cent.
“The market is moving from a fear of an inflation shock to pricing recession,” said Salman Baig, multi-asset portfolio manager at Unigestion.
“Markets are rushing to factor in [monetary] policy relief on the back of slowing growth,” said Themistoklis Fiotakis, head of FX research at Barclays.
Purchasing managers’ indices produced by S&P Global — viewed by investors as real-time gauges of business activity — indicated on Thursday that the US economy slowed sharply in June, while eurozone economic growth slumped to its weakest in 16 months.
But the US PMI, which collates executives’ responses to questions on topics from order volumes to commodity prices, also showed input costs were rising at their slowest pace in five months.
The closely watched surveys generated optimism that red-hot consumer price inflation, which hit a fresh 40-year high of 8.6 per cent in the US last month and is running at record levels in the eurozone, is about to peak.
Central banks worldwide have tightened monetary policy to battle inflation, with the US Federal Reserve implementing an extra large 0.75 percentage point…