Monday Market Minutes: Its no picnic out there

Global sharemarkets ended three weeks of losses on Friday as the bears retreated to the sidelines – for how long we don’t know.

The better tone came as fears about a looming recession eased as did concerns about aggressive central banks, rising inflation and interest rates.

The FTSE All-World index of developed and emerging market shares posted a 4.6% gain over the week.

Friday saw the Dow end 823.32 points, or 2.68% higher at 31,500.68, with the gain accelerating in the final hour of trading.

The S&P 500 added 3.06% to 3,911.74 while the Nasdaq closed with a 3.34% gain at 11,607.62.

In fact Friday saw the major market measures top a big comeback for stocks. The S&P 500 jumped 6.5% for the week, the Nasdaq Composite gained 7.5% while the Dow finished 5.4% higher.

Eurozone shares rose 1.8% and Japanese and Chinese shares rose 2%.

The positive global lead saw the Australian share market ended Friday with a modest (compared to other markets) 1.6% gain for the week, led by IT, property and health stocks.

Growth fears pushed saw bond yields down (with 10-year yields down 0.34% and 0.48% from their recent highs in the US and Australia respectively) and also drove commodities lower, led by weaker oil, metal and iron ore prices (for a second week).

The Aussie dollar remained just over 69 US cents as the greenback eased a touch on Friday.

The coming week in the US is a full five sessions, but next weekend is the height of the US summer – the Independence Day long weekend, so next Monday is a market holiday, meaning investors will probably invest safely on Friday for the three days.

Watch for a surge in complaints about the cost of petrol as Americans set out on holidays that will last off and on until Labor Day in September.

Watch out also for complaints about US airlines, the cost of air travel, high holiday prices and anything else to do with the cost of living – all while new Covid variants flourish.

“We believe that bounce in U.S. equity markets over the past three trading days has been a bear market rally off deeply oversold conditions,” Wolfe Research’s Chris Senyek wrote in a Friday note, according to CNBC.

“While there may be some additional near-term follow through, we believe that our intermediate-term bearish base case remains intact and that the next leg down is going to be driven by rising recession risks and downward earnings revisions,” Senyek added.

Financials sector did well with the sector up 3.8% after shares of several of the nation’s largest banks closed higher in the wake of the Federal Reserve releasing the results of its annual “stress test.”

The central bank said the 34 biggest US banks it oversees, have more than enough capital to weather a severe recession with unemployment at 10%, growth falling and share prices falling 55%.