Following a busy week of central bank meetings across the globe, the average of the world’s stock markets surged to a new 14-month high on Friday. In contrast, the U.S. dollar was on track to have its worst weekly decline since January.
The major market indexes on Wall Street were slightly higher, while the MSCI All-World index increased by 0.3%, reaching its highest point since mid-April 2022.
The Bank of Japan maintained its ultra-easy monetary policy on Friday despite higher-than-expected inflation, capping a busy week for central banks. The European Central Bank raised interest rates by a quarter point earlier in the week while the Federal Reserve held rates steady and hinted at potential future rate increases.
According to Chris Zaccarelli, chief investment officer of Independent Advisor Alliance, “Investors have had a really busy week.” However, for the most part, it’s been a pretty solid week. “We are seeing a little bit of a pause today in U.S. equity markets, possibly digesting some of the information that we got for this week,”
On Wall Street, the S&P 500 increased 11.92 points, or 0.27%, to 4,437.76, the Dow Jones Industrial Average increased 74.92 points, or 0.22%, to 34,482.98, and the Nasdaq Composite increased 3.40 points, or 0.02%, to 13,786.22.
The STOXX 600 index of all of Europe increased by 0.5%, while the Nikkei of Japan increased for the tenth consecutive week.
The dollar index, which compares the value of the dollar to a basket of other currencies, increased on currency exchanges, while the euro fell to $1.09 by 0.12%.
The dollar was nonetheless expected to see its worst weekly percentage decline since mid-January.
Following the BOJ’s announcement, the yen dropped to its lowest level versus the euro in 15 years. The value of the Japanese yen decreased by 1.05% against the dollar, reaching a six-month low of 141.81 per dollar.
A significant negative yield gap exists between the yen and the other G10 currencies, according to Vassili Serebriakov, an FX analyst at UBS in New York.
The benchmark 10-year yield increased after falling for two days in a row as statements from Fed members suggested the central bank was not yet finished raising interest rates. U.S. Treasury yields increased overall.
At a symposium on economics, Fed Governor Christopher Waller said that core inflation “is not coming down like I thought it would,” which likely calls for additional tightening.
Benchmark 10-year notes increased by almost 5 basis points, from 3.73% late on Thursday, to reach 3.78%.
A market picture made tighter by increased Chinese demand and supply cutbacks from OPEC+ was tempered by anticipated weakening in the global economy and the possibility of future interest rate rises. Oil prices increased moderately and were on track for a weekly gain.
Recently, U.S. crude increased by 0.35% to $70.87 a barrel, while Brent was up 0.17% for the day at $75.80 per barrel.