US stocks boosted by interest rate hopes after volatile week of trading

US stocks closed higher after a choppy week of trading, with investors on Friday buoyed by news that the Federal Reserve might begin to slow the pace of interest rate rises.

The broad S&P 500 rose 4.7 per cent for the week, including a 2.4 per cent rise on Friday. The technology-heavy Nasdaq Composite advanced 2.3 per cent, capping a 5.2 per cent gain over the past five sessions. Both indices recorded their largest weekly gains since June.

Stocks surged on Friday as an article from The Wall Street Journal suggested that Fed rate-setters might shift towards a tamer pace of rate rises from December. The US central bank has lifted borrowing costs by an extra large 0.75 percentage points over each of its past three meetings, taking its target range to 3 to 3.25 per cent.

Markets on Friday were pricing in expectations of US rates rising to just under 4.9 per cent by May 2023, down from expectations of 5.02 per cent on Thursday.

In government debt markets, US bonds steadied after coming under pressure earlier in the session. The yield on the benchmark 10-year US Treasury note was flat at 4.22 per cent.

Investors were also scrutinising the latest financial statements from companies during the ongoing earnings season, searching for signs of strain from high inflation, rising borrowing costs and challenging economic conditions.

Shares of Snap tumbled 28.1 per cent after the developer of camera and messaging app Snapchat revealed late on Thursday that revenue growth had slowed and losses had ballooned in the third quarter.

Advertisers were continuing to cut marketing budgets because of macroeconomic headwinds, Snap said. Shares of Facebook-owner Meta and Twitter were ended down 1.2 per cent and 4.9 per cent, respectively.

Europe’s Stoxx 600 share gauge lost 0.6 per cent on Friday. Adidas was among the biggest fallers in the region, with Germany-listed shares in the sportswear group sliding 9.5 per cent after it sounded the alarm on profits for the second time in three months.

Shares in rival Puma fell more than 7 per cent, while JD Sports Fashion dropped more than 6 per cent.

Elsewhere in global debt markets, UK bond yield soared 0.16 percentage points to 4.06 per cent, as investors grappled with uncertainty over the government’s borrowing plans following the departure of Liz Truss as prime minister. Bond yields rise as their prices fall.

Data on Friday also showed that UK retail sales fell more than expected in September, heightening concerns that the country was heading for a recession.

The quantity of goods bought in Britain shrunk by 1.4 per cent between August and September, following a sharp contraction in the previous month, according to data from the Office for National Statistics. Economists polled by Reuters had anticipated a 0.5 per cent contraction.

German bond prices also slipped lower, with the 10-year Bund yield rising 0.02 percentage points to 2.42 per cent.

In currencies, the dollar pared gains earlier in the session to trade 0.9 per cent lower against a basket of peers, while the pound also reversed course to trade up 0.7 per cent on the day against the greenback at $1.13. Japan’s yen fell as low as ¥151.94 against the dollar after sliding through ¥150 in the previous session for the first time since 1990.

The yen later shot higher at what is typically a quiet time of the week for the currency, touching ¥146.19. Traders and analysts said the sudden ascent bore the signs of official purchases from policymakers.

Additional reporting by Hudson Lockett in Hong Kong