Global bond markets and stocks experienced a rebound on Friday, following a quarter of heavy losses. The market recovery was fueled by signs of easing inflation in both the US and eurozone. Yields on European sovereign debt decreased after data showed a decline in the eurozone’s harmonized index of consumer prices. Additionally, core inflation in the eurozone fell more than expected, relieving concerns for the European Central Bank. Italian and German 10-year government bond yields also dropped after reaching a 10-year high previously. In the US, core PCE inflation decreased, aligning with economists’ predictions. As a result, the yield on benchmark 10-year US Treasuries, which had reached its highest level since 2007 earlier in the week, decreased.
Equity markets also experienced gains, with Wall Street’s benchmark S&P 500 and the tech-heavy Nasdaq Composite rising by 0.7% and 1.1% respectively. In Europe, the region-wide Stoxx 600 increased by 1.1% and Germany’s Dax rose by 1.2%. The UK’s FTSE 100 also saw a 0.6% increase, supported by data revealing a faster recovery of the UK economy from the pandemic compared to previous estimates. Similarly, France’s Cac 40 index gained 1.1% after domestic inflation grew at a slower annual pace in September than expected. Despite the expectation of inflation slowing down, concerns remain over prolonged high interest rates. Additionally, investors are monitoring the impact of surging oil prices, which have seen a 35% increase in the past two months due to lower global output.
Chinese tech stocks experienced a surge on Friday after China’s top internet regulator unveiled a draft rule simplifying cross-border data transfers. Hong Kong’s Hang Seng index rose by 2.5%, and the Hang Seng Tech index, which tracks the top 30 technology companies, climbed by 3.8%. Prominent internet companies Tencent and Alibaba witnessed gains of 3% and 2.2% respectively, while electric vehicle start-up Xpeng rose by 4.1%. Trading, however, remained closed in mainland China due to a holiday.