Stocks lose biggest weekly loss since 2020 due to central bank moves

Global stock markets closed higher Friday than the previous week. But investors are concerned that the central bank’s tighter monetary policy to fight inflation could hurt economic growth.

The U.S. Federal Reserve’s largest interest rate hike since 1994 and the first in Switzerland in 15 years, the U.K.’s fifth rate hike since December, and the European Central Bank’s decision to support debt in the South have led to a volatile market.

The Dow Jones Industrial Average fell 0.13%, the S&P 500 rose 0.22% and the Nasdaq Composite gained 1.43%.

For the week, the S&P 500 is down 5.8%, the largest decline since the third week of 2020.

“Inflation, wars, and lockdowns in China have halted global recovery,” Bank of America economists said.

Fears that an interest rate hike could trigger a recession have pushed up the price of government bonds and slowed the rise in yields. These will fall as prices rise.

The yield on 10-year U.S. Treasury notes fell to 3.22944% after hitting an 11-year high of 3.498% on Tuesday.

Yields on Southern European bonds fell sharply following reports from ECB Chair Christine Lagarde on the central bank’s plans.

In Asia, the broadest Asia-Pacific MSCI equity index outside Japan fell to a five-week low due to a sell-off in Australia. Japan’s Nikkei fell 1.8% and was down almost 7% on the week.

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