Wall Street rallied the most this week since last summer even as the market pulled back on Friday as investors attempt to gauge the impact of the coronavirus.
The S&P 500 slid 0.5 per cent on Friday but gains over the last four days helped it notch a 3.2 per cent gain for the week — its biggest such increase since June 2019.
The Nasdaq Composite, shed 0.5 per cent for the day, but rose 4 per cent over the week for its biggest such gain since November 2018.
European markets followed a similar pattern to their US counterparts. The pan-European Stoxx 600 shed 0.3 per cent on the day but still clocked a 3.3 per cent rise over the week — its biggest weekly gain since November 2018.
Investors had returned to risk assets earlier this week after China’s central bank pumped extra cash into its financial system to help the economy combat the fallout from the virus. Positive manufacturing data and a pledge by Beijing to halve tariffs on some US imports also helped boost risk sentiment.
However on Friday, fears about the economic impact of the virus on the Chinese and global economy resurfaced. The Federal Reserve warned that “spillovers” from the coronavirus outbreak pose a fresh “risk” to the US outlook, unnerving investors despite strong labour market data that showed the US economy created far more jobs than forecast at the start of the year.
Emerging market currencies were another asset class that came under fire as fears about the economic toll saw investors flee the asset class. The JPMorgan Emerging Market Currency index slipped 0.7 per cent on Friday — its worst showing since August, and posted its fifth consecutive weekly decline. Elsewhere, the Australian dollar fell to its lowest level in 11 years.
The dollar index, a gauge of the buck against a weighted basket of peers, rose 0.2 per cent on the day and notched its best week since June 2018, with a gain of 1.35 per cent.
Meanwhile, so-called haven assets rallied, with the yield on the US 10-year down 6.1 basis points to 1.5817 per cent on Friday. Yields move inversely to price.
Source: Economy - ft.com
