European shares rise as traders assess global economic outlook

European stocks and Wall Street futures rose on Monday as traders tried to call an end to a downturn in global stocks fueled by soaring inflation and concerns about major economies falling into recession. Depression.

The Stoxx Europe 600 share index was up 0.6% in morning trade, while London’s FTSE 100 was up 0.7%. This followed a belated turn on Wall Street on Friday as the short-term S&P 500 equity benchmark got into bear market territory – defined as a 20% drop from recent peaks – before recovering to close 0.01% higher.

Futures trading implies that the S&P will gain 0.6% in early-year New York trades and the tech-focused Nasdaq 100 will also gain 0.6%.

“Shares appear to have begun another rally in the bear market,” said Morgan Stanley strategist Michael Wilson. “We remain confident that lower prices are still ahead.”

Global stock markets have tumbled this year as inflation – fueled by economies reopening following a coronavirus shutdown and Russia’s invasion of Ukraine disrupted fuel and food prices – reached its highest level in decades in many countries.

Central banks including the US Federal Reserve and the Bank of England have signaled that they will raise borrowing costs until consumer prices stabilize. valuation assessment of companies formerly touted for their extremely low interest rates.

While, quarterly earnings from major US companies including Walmart and Target show that consumer spending has been depressed due to higher cost of living.

Much of the current debate in financial markets focuses on whether the US economy, which will be boosted in 2020 and 2021 by government and central bank stimulus spending, will fall into recession.

“Our view is that we are talking about trend-adjusting growth rates,” said James Ashley, head of international market strategy at wealth management firm Goldman Sachs.

he added. “Dealing with all three at the same time requires extreme caution.”

The US Dollar Index, which measures the US currency against six other currencies, fell 0.7% as analysts queried whether a rally led by investors selling off other assets would go away. too far or not.

“The market has hoarded a large amount of dollars in recent months, resulting in a very substantial dollar valuation,” said Deutsche Bank strategist George Saravelos.

The euro rose 0.5% against the US currency on Monday, to buy just over $1.06. Sterling added 0.5% to just under $1.26.

The 10-year US Treasury note yield added 0.03 percentage points to 2.81%. This key debt yield, which is inversely proportional to the price of benchmark securities and underpins lending prices worldwide, stood at around 3% just a week before the devastating recession boosted demand for low-risk assets. The equivalent German Bund yield rose 0.02 percentage points to 0.96 percent.

In Asia on Monday, Hong Kong’s Hang Seng stock index fell 1.2%, losing about 10% since early March to about 10% amid strict anti-coronavirus tightening measures in China. . Mainland China’s CSI 300 traded 0.6% lower, although the Nikkei 225 in Tokyo gained 1%.

Brent crude, the oil benchmark, rose 0.6 percent to $113.21 a barrel.

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