New York: Global stocks rallied on Friday, led by technology and growth shares, and interest-rate sensitive two-year U.S. Treasury yields hit more than 14-year highs as investors digested the view that more interest rate hikes are needed. The dollar fell to a more than one-week low and the euro rose back above parity to a three-week high against the U.S. currency, a day after the European Central Bank raised rates by a record 75 basis points on Thursday signaleded further hikes to fight inflation.
On Wall Street, all three major indexes ended with gains of at least 1%, scoring their first weekly increase in four weeks. “After three weeks of a temper tantrum, the market has finally come to terms with the expected 75-basis-point increase from the (Federal Reserve) this month,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. “People logically know we’ve got to change inflation, and that’s being done… and rates are still incredibly low” historically, Dollarhide added.
Fed Governor Christopher Waller said on Friday that the US central bank should be aggressive with rate hikes while the economy “can take a punch.” The comments came a day after Fed Chair Jerome Powell reconfirmed that the central bank’s priority is to tackle soaring price pressures. Investors await key US inflation data for August due on Tuesday.