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Global markets saw gains on Friday, capping off a strong week, as positive U.S. economic data helped calm concerns about a potential recession in the world's largest economy.

In the U.S., major stock indices extended their weekly advances. The Dow Jones Industrial Average closed up by 0.25%, bringing its total weekly gain to 2.7%. Meanwhile, the S&P 500 and Nasdaq Composite both increased by 0.2% on Friday, finishing the week up 3.7% and 5%, respectively. These represent some of the best weekly performances for the year.

The MSCI World Index, which tracks global equities, rose 0.5%, continuing its recovery from last week's turbulence, which was fueled by fears of a U.S. recession and volatile currency markets. Europe's STOXX 600 Index added 0.3%, marking its highest point in two weeks and achieving its strongest weekly gain since early May, up 2.4%.

Market sentiment improved sharply this week following U.S. data showing that inflation is cooling and retail sales are strong. This shift in narrative-from recession fears triggered by weak U.S. employment data earlier in the month to renewed confidence in the economy's resilience-has buoyed investor sentiment. The softening inflation figures have also bolstered expectations that the U.S. Federal Reserve might cut interest rates in September.

A key survey on Friday revealed that U.S. consumer sentiment improved in August, driven by recent developments in the U.S. presidential race, while inflation expectations remained stable. Market strategists, including Scott Wren of the Wells Fargo Investment Institute, noted that the data suggests the economy is slowing, but the risk of a recession remains low. Wren described the current environment of modest growth and moderating inflation as favorable for both stocks and bonds.

Attention is now turning to next week's gathering of central bankers in Jackson Hole, Wyoming. Traders are anticipating that the Fed might reduce borrowing costs from their current 23-year highs next month, although the likelihood of a significant rate cut has decreased, according to CME's FedWatch tool.

U.S. Treasury yields declined on Friday, with the benchmark 10-year note yield dropping 4 basis points to 3.883%, partially reversing the previous session's rise.

In Asia, Japan's Nikkei surged 3.6% on Friday, marking its best week in over four years, while Hong Kong's Hang Seng Index rose by 1.9%. Japanese equities rebounded after last week's losses, which followed a surprise rate cut by the Bank of Japan that had strengthened the yen, disrupting yen-funded trades.

The U.S. dollar weakened against the yen and other major currencies on Friday, partly due to disappointing U.S. housing data. A report showed a decline in single-family homebuilding in July, reflecting the ongoing challenges in the housing market. The euro gained 0.47% against the dollar.

Oil prices fell nearly 2% on Friday, with Brent crude settling below $80 a barrel. Despite the drop, oil prices remained relatively stable for the week as investors adjusted their expectations for demand growth from China, the world's largest oil importer. Brent crude closed at $79.68 per barrel, while U.S. crude settled at $76.65.

In commodities, spot gold prices surged, reaching an all-time high with a gain of more than 2%, driven by safe-haven demand amid ongoing market uncertainties.