Stocks gain sharply for day and week, while copper falls further

Stocks on global markets rallied on Friday and registered strong gains for the week as a recent slide in commodity prices eased worries about inflation and the rate hike outlook.

The S&P 500 climbed 3.1 per cent in its biggest daily percentage gain since May 2020, and the MSCI global index rose 4.8 per cent for the week, snapping three straight weeks of declines. US Treasury yields edged up from two-week lows.

Investors have been worried that aggressive interest rate hikes by the Federal Reserve and other major central banks to combat inflation could cause a recession, which would reduce demand for commodities and other items.

“The (stock) market came into this week oversold, so it was time for a bounce,” said Quincy Krosby, chief equity strategist at LPL Financial in Charlotte, North Carolina.

“We’ve seen oil prices come down along with other commodity prices,” she said, adding that the market’s move is reflecting “expectations of at least a marked slowdown if not an out-and-out recession.”

Also, the University of Michigan consumer sentiment survey’s reading on five-year inflation expectations was positive for stocks, Krosby said. It eased to 3.1 from the preliminary 3.3 per cent estimate in mid-June.

The benchmark S&P 500 last week confirmed a bear market.

The Dow Jones Industrial Average rose 823.32 points, or 2.68 per cent, to 31,500.68, the S&P 500 gained 116.01 points, or 3.06 per cent, to 3,911.74 and the Nasdaq Composite added 375.43 points, or 3.34 per cent, to 11,607.62.

For the week, the S&P 500 rose 6.4 per cent, the Dow added 5.4 per cent and the Nasdaq gained 7.5 per cent.

The pan-European STOXX 600 index rose 2.62 per cent and MSCI’s gauge of stocks across the globe gained 2.63 per cent.

Benchmark copper on the London Metal Exchange was 0.5 per cent lower at $8,367 a tonne after touching $8,122.50, down 25 per cent from a peak in March and the lowest level since February 2021. Other industrial metals also tumbled.

Oil prices were higher Friday on but notched their second weekly decline. On the day, Brent crude settled up $3.07, or 2.8 per cent, at $113.12 a barrel, while US West Texas Intermediate crude settled up $3.35, or 3.2 per cent, at $107.62.

In the Treasury market, yields have dropped from more than decade highs reached before last week’s Fed meeting. The US central bank hiked rates by 75 basis points at the meeting.

Fed funds futures traders are now pricing for the benchmark rate to rise to about 3.5 per cent by March, down from expectations last week that it would increase to around 4 per cent.

Benchmark 10-year yields were last at 3.125 per cent. They have fallen from 3.498 per cent on June 14, the highest since April 2011.

In the foreign exchange market, the US dollar fell and posted its first weekly decline this month.

In afternoon New York trading, the dollar index, which measures the US unit against six major currencies, fell 0.2 per cent to 104.013.

The US dollar’s slide boosted even commodity-focused currencies such as the Australian dollar and Norwegian crown. The Aussie rose 0.8 per cent to US$0.6946. Spot gold added 0.2 per cent to $1,826.39 an ounce.