Markets rally heats up

Risky assets gained on Friday, with the US dollar retreating. The all-time strong US dollar against other major currencies elevates global economic risks and induces headwinds for corporate America.

 

S&P 500 and Nasdaq added 1.53% and 2.11% respectively and Canada’s S&P/TSX added 1.86%. S&P 500 snapped a three-week decline and surpassed its 100-day moving average. Riskier assets, including tech shares, meme stocks, and cryptocurrencies, rallied.

 

Investors interpreted remarks from the US officials as showing the next rate hike will not be as significant as feared after three weeks of market decline, which put equities in the oversold area.

 

The mixed economic data still shows that the risk of the recession may not be as high. Initial jobless claims came in below 235,000, which shows the fourth week of decline and below economists’ expectations.

 

Elsewhere, European Central Bank (ECB) increased its primary financing rate by 75% to 1.25% to combat inflation. Europe"s energy crisis and the ECB’s inability to keep up with the hawkish trend of other central banks have put pressure on the European economy and pushed the euro to an all-time low against the US dollar.

 

After the 20% decline in oil prices, which pushed West Texas Intermediate near 80 a barrel, the crude rebounded to 86 a barrel today. Most of the research predicts oil prices of around 100 by yearend.