European stocks got off to a strong start on Monday following Wall Street’s positive close on Friday, with attention turning to US inflation data for more clues on whether interest rates have reached their peak. maximum.
The MSCI world stock index rose 0.2% to its highest level in four weeks (667.7) and the pan-European STOXX 600 index gained 0.8%.
“Less optimistic remarks from European and British central bankers in recent days give hope that we are close to the peak of rate hikes,” said Russ Mould, chief investment officer at AJ Bell.
“Here in the UK it seems that the markets almost believe that they will avoid recession, that the currency will not collapse and that the worst predictions will not come true,” he added.
The UK’s blue chip index led the region’s modest run of stock index gains by rising 0.8% by 0930 GMT.
Elsewhere, a rise in U.S. Treasury yields helped send the dollar to a new one-year high against the yen, while derailing an early rally in technology stocks.
U.S. 10-year Treasury yields rose to a one-week high of 4.668% during the Asian trading day, testing the top of their recent range since weak nonfarm payrolls figures in early this month fueled bets in favor of rate cuts from the Federal Reserve. They have since returned to 4.632%.
The dollar hit 151.78 yen for the first time since mid-October last year, although it was stable against the euro and the pound sterling, and it still stood at 151.70 near these peaks at 9:30 GMT.
Japan’s Nikkei gave up its initial gains by more than 1% to end the day almost flat.
U.S. stock futures also pointed down 0.20%, following Friday’s 1.56% rise for the S&P 500.
Nomura Securities strategist Naka Matsuzawa said stocks are likely near a peak.
“So far, the market has taken bad economic news as good news because it would mean a pause in Fed rate hikes,” he said.
“But today the Treasury market has already priced in that pause, so there isn’t much room left for Treasury yields to fall further,” which would remove support for the stock market, he added. “In short, I don’t think the stock market rise will continue.
The week is full of risk events, with US inflation and retail sales figures on Tuesday and Wednesday respectively. Chinese retail sales are also expected on Wednesday, after lackluster sales growth during the annual “Singles Day” shopping festival over the weekend.
The most important geopolitical event will take place midweek, with a meeting between US President Joe Biden and Chinese leader Xi Jinping on the sidelines of an Asia-Pacific Economic Cooperation (APEC) summit in San Francisco.
Investors, however, paid little attention to Moody’s announcement late Friday that it was lowering the outlook for the United States’ credit rating from “stable” to “negative.”
Crude oil prices fell on Monday as concerns over demand outweighed those over supply, amid slowing growth in the United States and China.
Brent oil futures for January and West Texas Intermediate (WTI) oil for December were down slightly, both down about 5 cents at $81.37 and $77.13 per barrel.
Both benchmarks gained nearly 2% on Friday as Iraq voiced support for OPEC+ oil cuts.
This article is originally published on zonebourse.com