December 2, 2022

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Global stocks rebounded, but headed for a weekly loss

Global stocks rebounded, but headed for a weekly loss

LONDON (Reuters) – European shares rebounded on Friday, but global equities were still on track to post their first weekly loss in four as prospects of higher global interest rates and geopolitical risks rattled investors.

Global risk appetite subsided during the week as minutes from the Federal Reserve and the European Central Bank showed that policy makers are preparing to step up efforts to rein in inflation.

At 0811 GMT, the MSCI . World Stock Index was released (.MIWD00000PUS)which measures stocks in 50 countries, rose 0.2% but this week was down 1.3% and is on track to post its first weekly loss in four countries.

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stokes 600 pan europe (.stoxx) It was up 1.3% as markets in Europe played catch-up with a modest bounce seen on Wall Street on Thursday.

Eddie Cheng, head of international multi-asset portfolio management at Allspring Global Investments, said European stocks’ move higher on Friday morning was “likely just a little bit” of the downtrend for the week, but investors were still preoccupied with the matter. The Federal Reserve raised interest rates and the war in Ukraine.

“The ambiguity is not diminishing, but in fact increasing,” he said, referring to new sanctions against Russia. The European Commission proposed new sanctions against Russia on Tuesday, including a ban on the purchase of Russian coal. Read more

The risks of the French presidential election were evident in bond markets with French borrowing costs rising, compared to an overall decline in core European government bond yields.

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Investors are concerned about the risks of far-right candidate Marine Le Pen winning over incumbent President Emmanuel Macron.

“Macron’s victory will be welcomed by markets as markets will be priced in as political uncertainty diminishes and business-friendly management continues,” said Lale Akoner, chief market strategist at BNY Mellon Investment Management.

Polls show that Le Pen’s victory, while still unlikely, now falls within the margin of error ahead of Sunday’s first round of voting. Read more

The spread between French and German 10-year bond yields was close to the widest level since April 2020 at 54.5 basis points.

In the US bond markets, long-term Treasuries bore the brunt of the sell-off this week as traders see the long end the hardest hit from the Federal Reserve’s cut in its bond holdings.

The benchmark 10-year yield rose 27 basis points to 2.6584% this week, but held steady in early European trade.

The US dollar was the main beneficiary of higher US yields and the dollar index rose for the seventh day in a row and on track for its best week in five.

A stronger dollar has added to pressure on the faltering euro and yen. The Japanese currency is approaching its lowest level in years and is grappling with 124.00, while the euro fell to its lowest level since March 7 at $1.0848.

Brent crude futures rose after earlier dropping below $100 a barrel. US crude oil futures rose 0.8% to $96.76 a barrel.

Gold was little changed at $1,931 but was due to gain 0.3% for the week.

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The major cryptocurrencies posted small gains with bitcoin trading at $43,813, although it is still on track for its second consecutive weekly decline.

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(Reporting by Samuel Indyk and Elizabeth Hawcroft) Editing by Nick McPhee

Our criteria: Thomson Reuters Trust Principles.