European shares opened higher on Friday, clawing back some losses following a sharp sell-off in the previous session, as global bonds slumped to their lowest level since 1990.
In London, the FTSE 100 (^FTSE) rose 0.5% after the opening bell, the CAC (^FCHI) was 0.6% higher in Paris and Frankfurt’s DAX (^GDAXI) added 1.1% on the day.
Richard Hunter, head of markets at Interactive Investor, said: “After a poor start to the month, the FTSE100 staged a comeback in opening exchanges, even though the rebound was somewhat half-hearted.
“Gains were limited by a broad markdown of housebuilders in light of a possibly cooling housing market, while the general losses from the previous day added to the erosion of the hard-fought gains which the index had previously made.
“Today’s rise leaves the FTSE100 down by 2.8% this year and, with no immediate end in sight to a raft of economic challenges, the volatility and uncertainty of recent months looks likely to persist.”
It comes as global bonds tumbled into their first bear market in a generation, hurt by swift interest rate rises in major economies to stem rampant inflation, Bloomberg reported.
The Bloomberg Global Aggregate Total Return index of government and investment-grade corporate bonds fell over 20% from its 2021 peak, the biggest drawdown since it was created in 1990.
Across the pond, US benchmarks snapped a losing streak on Thursday, providing a slight respite for battered indices ahead of the latest US jobs reading later today.
Wall Street’s S&P 500 (^GSPC) advanced 11.85 points, or 0.3%, to 3966.85. The tech-heavy Nasdaq (^IXIC) dipped 2.8%, while the Dow Jones (^DJI) declined 1.9% at Thursday’s close.
Michael Hewson, chief market analyst at CMC Markets, said: “This week’s economic data out of the US has merely served to bolster the message in respect of the Fed’s determination to raise rates and mitigate any concern their actions might have on the US economy.
Read more: UK economy faces recession before year end
“Another positive payroll number today would in all probability rubber stamp the possibility of a 75bps rate hike when the US Federal Reserve next meets later this month.
“We’ve so far seen little evidence that the rising cost of living in the US has prompted a return to work from those early pandemic retirees, like we’ve started to see here in the UK.
“Could that be about to change as we head towards the autumn and the weather gets colder and the cost of living starts to bite a little harder?”
Asian stocks finished mixed overnight, with the Nikkei (^N225) closing flat in Tokyo, while the Hang Seng (^HSI) shed 0.7% in Hong Kong and the Shanghai Composite (000001.SS) gained 0.1%.
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