Global stocks headed for their best week since November 2023 after encouraging U.S. economic data soothed fears of an imminent recession, in a rapid shift from a rout last week that kept investors wary of a bumpy ride ahead.
The VIX U.S. stock volatility index, broadly considered the market’s fear gauge, sat at benign levels of about 15 after hitting a four-year high of 65 early last week. This so-called soft landing scenario may not hold, Aviva Investors multi-asset portfolio manager Sotirios Nakos cautioned, who suspected markets could keep swinging with every new economic data point. “The market went very quickly to price more negative data and now what we’re primarily seeing is the rapid unwinding of that,” he said.
Markets expect the U.S. Federal Reserve to lower borrowing costs from a 23-year high next month but have reduced their bets of an emergency 50-basis-point cut to 25% from 55% a week ago, the CME FedWatch tool showed. The Japanese currency eased to 148.96 per dollar, on Friday, languishing near a two-week low of 149.40 hit in the previous session and some distance away from last week’s seven-month peak.