China’s rate cut makes Asian and European stocks go up.

Asian and European stocks went up on Friday because China lowered its hobby tax, but US stocks went up and down because investors were worried that sky-high inflation would cause a recession.

“Markets were looking for a reason to go up, and a fee cut in China gave them one,” said IG analyst Chris Beauchamp.

The People’s Bank of China said it would drop its five-year loan prime rate from 4.6 percent to 4.45 percent. This is a key interest rate that lenders use to figure out mortgage rates.

The move is different from what other major central banks, like the US Federal Reserve and the Bank of England, are doing, which is to raise the cost of borrowing money to stop consumer prices from going through the roof.

Traders were hopeful that China’s move could wake up the world’s second-largest economy, which had been put to sleep by Covid.

“The PBOC’s rate cut is good news, and it’s clear that it’s meant to help the struggling property market, which is still hurting from last year’s crackdown and this year’s Covid lockdowns,” said Craig Eram, a senior market analyst at OANDA.

“This could help a very important part of the economy get back on its feet,” he said. “But whether it’s enough to help China reach its growth goal of 5.5 percent this year is another thing.”

Asia’s main stock markets ended the day with gains, as did Europe’s main markets, though those gains slowed as the day went on.

Wall Street also started out higher but then fell. The S&P 500 temporarily fell into a “bear market,” which is a drop of more than 20% from a recent peak.

The broad-based S&P 500 ended the day at 3,901.36, which was about the same as it started. It was down 3% for the week and 19% from its high point in January.

Fawad Razaqzada, a market analyst at City Index and FOREX.com, said, “Stocks are still on shaky ground.”

He said that investors are worried about inflation, interest rate hikes, slow economic growth, stagflation, and recession.

“Perhaps most importantly for stocks, the Fed isn’t there to provide cushion like it used to,” he said, since the US central bank is raising interest rates to fight inflation.

Retailers’ disappointing earnings reports have added to market uncertainty at a time when interest rates are going up, energy prices are going up, China is locking down Covid, and Russia is still at war with Ukraine.

In recent months, major stock indices have lost huge amounts of their value.

In Europe, shares in Paris and Frankfurt are down between 14 and 15%, while the main index in London is only down 3.9%.