Stocks continued to rise in U. S. trading session

Stocks continued to rise in U. S. trading session

By Ray Johnson

Budrigannews.com – Investors lowered their expectations for rate hikes from the United States Federal Reserve and expressed optimism regarding the reopening of China’s borders, which led to increases in European stock indexes and world stock markets to their highest levels in more than three weeks early on Monday.

On Friday, employment data from the United States revealed a rise in the workforce and a slowing of wage growth. Investors interpreted this and data indicating a contraction in the US service sector as a sign that the Fed might be less hawkish. The dollar fell and global stocks rose.

Asian stocks rose on Monday as a result of China’s reopening of its borders, improving the outlook for the global economy. Outside of Japan, MSCI’s broadest index of shares from Asia-Pacific rose to its highest level in more than six months.

The MSCI World Equity index was up 0.6% at 1219 GMT, reaching its highest level since December 15.

London’s was 0.1% lower after reaching its highest level since 2019 earlier in the session, while Europe’s was 0.5% higher and also close to a one-month high.

Both were expected to open higher on Wall Street, up 0.4 percent.

Hani Redha, PineBridge’s global multi-asset portfolio manager, stated, “The market is reading that wage pressures are easing quite rapidly and seeing that as a positive and potentially people whispering the words’soft landing’ more loudly now.”

After raising interest rates, the ideal Federal Reserve policy objective is a “soft landing,” which is when inflation slows but there are not enough job losses to cause a recession.

Redha stated that additional wage data would be required and that the market’s reaction to the U.S. jobs data was “over-excited.”

In February, money markets were anticipating a 25% chance of a half-point increase, down from approximately 50% a month earlier. Thursday’s CPI data will provide investors with additional clues regarding the Fed’s next move.

After falling 1.2% on Friday, the was down around 0.2 percent, still close to its lowest level in seven months.

Compared to a rise of 1.2% on Friday, the euro was up 0.4% at around $1.0688.

The Australian dollar, which is frequently used as a proxy for risk appetite, was up 0.6% on the day at $0.6913, having reached its highest level since late August earlier in the session. China’s versus the U.S. dollar was close to its highest level in five months at 6.7882.

According to Redha of PineBridge, “The pace of (China’s) reopening is much more rapid I think than anyone was expecting” and “we’ll see this flow through to the fundamentals for several months to come.” On the assumption that China’s COVID regulations would lessen, PineBridge stated in November that it had significantly increased its exposure to China equity.

Redha continued, “China’s going to be accelerating whereas you’ll see growth decelerating everywhere else, and that’s going to be fairly positive for Asia as a region and markets like Australia, which are going to benefit from the impact on commodities as China reopens.” China’s reopening will have a positive impact on markets like Australia.

Overshadowing concerns about a global recession was China’s reopening, which led to an increase in oil prices of more than 3%.

The day’s gains in emerging market stocks, which have increased by more than 20% since their October lows, totaled 2.4%.

European government bond yields increased in bond markets, reversing the sharp declines of the previous week. The benchmark 10-year government bond issued by Germany gained 4 basis points to 2.252%.

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The also recovered after a sharp drop on Friday and was up 2 bps at 3.5893.

Analysts are concerned that the major U.S. banks will not experience any year-over-year growth in overall earnings this earnings season.