Global Markets Climb Amid Positive Economic Indicators

U.S. and global markets surged on Friday, extending weekly gains due to favorable economic data, easing recession concerns. The Dow Jones, S&P 500, and Nasdaq saw significant increases. European and Asian markets also rallied. Positive U.S. inflation and retail data, combined with a stable consumer sentiment, fueled investor optimism.

Global markets experienced a boost on Friday, buoyed by encouraging economic data that alleviated recession concerns in the U.S., the world's largest economy. In U.S. afternoon trading, major indices such as the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite reported gains of 0.25%, 0.17%, and 0.16%, respectively. As a result, these indices showed impressive weekly increases.

MSCI's main world stock index rose by 0.48%, continuing its recovery from recent market volatility driven by U.S. recession fears and fluctuations in foreign exchange rates. Europe's STOXX share index also saw a 0.3% rise on Friday, pointing towards a positive weekly outcome. The VIX stock volatility index, often termed the market's fear gauge, steadied at a benign level of around 15, well below its high of 65 from the previous week.

This positive market sentiment emerged following the release of U.S. data demonstrating moderating inflation and robust retail spending. Such developments shifted the focus from recession worries, stemming from a weak job report earlier in August, to confidence in continued economic growth. Expectations of an interest rate cut by the U.S. Federal Reserve in September were bolstered by the softer inflation data.

Survey data on Friday indicated a rise in U.S. consumer sentiment for August, influenced by the U.S. presidential race, while inflation expectations remained steady. Market expert Scott Wren from Wells Fargo Investment Institute noted that stocks were reacting positively to the likelihood of continued economic growth despite slowing down and increased earnings estimates.

David Aujla, Invesco's multi-asset fund manager, indicated that although recession fears might ease, market volatility could persist, particularly around the November U.S. presidential election. Aujla emphasized a focus on fundamental investment decisions. Lower U.S. Treasury yields also offered respite, with a slight decline observed as inflation trends supported the prospect of a rate cut by the Fed next month.

Market gains were mirrored across Asia, with Japan's Nikkei rising 3.6%, marking its strongest week in over four years, and Hong Kong's Hang Seng index climbing 1.9%. In currency trading, the yen strengthened against the dollar, which fell after disappointing U.S. housing stats. Simultaneously, oil prices declined, largely due to weak indicators from China overshadowing geopolitical concerns, with Brent crude closing at around $80 per barrel.

(With inputs from agencies.)