Global Stock Markets Surge Amid Economic Optimism

Global stock markets made significant gains on Friday, following a strong rally on Wall Street the previous day. This upturn came as a positive report on U.S. unemployment alleviated some concerns about an economic slowdown.

European markets opened higher, recovering nearly all the losses suffered during the week’s global market decline. France’s CAC 40 climbed by 0.7% to 7,296.61, while Germany’s DAX gained 0.3% to 17,739.37, buoyed by news that July’s inflation increased by 2.3% year-over-year, largely due to rising service prices. Meanwhile, Britain’s FTSE 100 saw a 0.6% increase, reaching 8,193.34. Futures for the S&P 500 indicated a 0.4% rise, and the Dow Jones Industrial Average was poised to increase by 0.2%.

In Asia, Tokyo’s Nikkei 225 closed 0.6% higher at 35,025.00. The Japanese yen reversed earlier losses, extending its gains for a fourth consecutive day against the dollar, a movement that typically results in diminished momentum for Japanese stocks.

Earlier in the week, U.S. employment data had come in weaker than anticipated, sparking fears of an economic slowdown due to the Federal Reserve’s prolonged high-interest rates aimed at curbing inflation. This led to a sell-off in global markets, exacerbated by investors unwinding yen carry trades.

China reported higher-than-expected inflation for July, with the consumer price index rising by 0.5% year-over-year, driven by stabilizing food prices. Hong Kong’s Hang Seng Index increased by 1.2% to 17,090.23, while the Shanghai Composite dipped by 0.3% to 2,862.19.

South Korea’s Kospi advanced by 1.2% to 2,588.43, and Australia’s S&P/ASX 200 rose by 1.3% to 7,777.70. Taiwan’s Taiex surged by 2.9%, led by a 4.2% gain in Taiwan Semiconductor Manufacturing Co., which mirrored the rally in U.S. Big Tech stocks. In Bangkok, the SET index was up by 0.2%.

On Thursday, the S&P 500 posted a robust 2.3% gain, closing at 5,319.31, its best performance since 2022. The Dow Jones Industrial Average increased by 1.8% to 39,446.49, and the Nasdaq composite jumped by 2.9% to 16,660.02, driven by strong performances from Nvidia and other major tech companies.

Treasury yields also rose, reflecting investor confidence in the economy after fewer than expected Americans filed for unemployment benefits last week.

Despite the positive movement, the S&P 500 remains nearly 10% below its all-time high from last month. Market analysts suggest that the recent volatility appears to be driven more by a “positioning-driven crash,” where investors simultaneously exit similar trades rather than by a recessionary trend.

In energy markets, U.S. crude oil prices were virtually unchanged at $76.17 per barrel, while Brent crude, the global benchmark, dipped by 7 cents to $79.09 per barrel. In the bond market, the yield on the 10-year Treasury note increased to 3.99% from 3.95% on Wednesday.

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