Last week, global stock prices surged as investors hope for a positive outcome from negotiations between Russia and Ukraine, and uncertainty regarding the monetary policy of the U.S. central bank has been removed.
On Wall Street, the Dow Jones rose 5.5% last week to 34,754 points, while the S&P 500 jumped 6.2% to 4,463 points, and the Nasdaq index increased by 8.2% to 13,893 points.
This marks the largest weekly jump for these indices since November 2020, driven in part by investors’ hopes for a positive outcome from negotiations between Russia and Ukraine, despite the ongoing fierce attacks by the Russian army on Ukrainian cities.
Market support also comes from the removal of uncertainty regarding the monetary policy of the U.S. central bank.
After a two-day meeting, Fed leaders raised the key interest rate on Wednesday for the first time since 2018, by 0.25 percentage points, in an effort to curb inflation, which has reached its highest levels in 40 years. They estimate that this rate could be between 1.75% and 2% by the end of the year.
While the quarter-point increase was in line with analysts’ expectations, the estimates for interest rate growth by the end of the year are higher than many anticipated.
However, investors were encouraged by Fed Chairman Jerome Powell’s message that the economy is strong enough to withstand interest rate increases and maintain the current strong trend of job and wage growth.
He also indicated that inflation is expected to remain above the Fed’s target level of 2% until 2024 and that the central bank will raise rates more aggressively if the situation does not improve.
