Global stocks are having their strongest weekly rally in a year, global yields are sliding and corporate earnings reports have been surprisingly robust.If all goes to plan, markets end what has been a turnaround week with a U.S. jobs report that underpins the optimism around peak global rates. World stocks IIACWI are up 4.2% for the week so far, their largest weekly rise since November 2022. The S&P 500 chalked up its best day in six months, also boosted by strong corporate earnings and guidance – Apple reported forecast-beating quarterly sales and profit, although shares fell slightly in after hours trade.
The premise is that the Federal Reserve, Bank of England, European Central Bank and other central banks are done raising rates. If the Fed delivered a ‘dovish’ pause on Wednesday, the BoE delivered a ‘hawkish’ pause on Thursday. But the over-arching reaction across markets was the same – huge rallies in bonds, stocks and risk assets. Ten-year gilts had their sharpest rally in more than a month.