NEW YORK/LONDON (Reuters) – Wall Street stocks rose on Monday, tracking gains in Asia and Europe amid signs of easing restrictions by China, and as investors made expected rate hikes in the coming days despite crude oil. Oil hit $120 a barrel.
The dollar was little changed against the euro ahead of the European Central Bank’s monetary policy meeting on Thursday, but it was weaker against commodity currencies – the Canadian, Australian and New Zealand dollars – as risk appetite increased.
Mark Chandler, chief market strategist at Bannockburn Global Forex, said a Wall Street Journal report that Chinese regulators are completing investigations into passenger giant Didi Global Inc and easing domestic COVID restrictions has boosted sentiment.
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“You have the second largest economy in the world continuing to open up,” he said. “It looks like Didi may be available again in mobile app stores and that Beijing has opened public transportation.”
Didi’s shares rose 52.2% on the back of the Journal report, and the news helped Hong Kong’s Hang Seng tech index to close 4.6% higher. Read more.
The sentiment was also helped by comments from US Commerce Secretary Gina Raimondo that President Joe Biden has asked his team to consider the option of raising some tariffs on Chinese imports. Read more
Chandler said people are no longer talking that the Fed might raise interest rates by 75 basis points and pulled back a bit from the 50 basis point hike in September, which boosted sentiment.
Major US stock indexes rose about 1% or more, and those of Britain’s major countries rose (.FTSE)Germany (.GDAXI)France (.fchi)Italia (.FTMIB) and Spain (.caribou).
Pan-European STOXX 600 Index (.stoxx) It rose 1.22% and the MSCI gauge of stocks worldwide (.MIWD00000PUS) A profit of 1.15%.
On Wall Street, the Dow Jones Industrial Average (.DJI) The S&P 500 rose 0.94%. (.SPX) Gain 1.36% and the Nasdaq Composite (nineteenth) Added 1.73%. growth stocks (.IGX) It rose 1.8%, or more than double its 0.9% gain in value.
US Treasury yields rose as the market prepared to sell $96 billion of debt this week and ahead of data on Friday expected to show US inflation remains hot.
The Consumer Price Index (CPI) is expected to rise 0.7% last month, compared to 0.3% in April, with annual inflation remaining unchanged at 8.3%, according to the median estimate of economists polled by Reuters.
Michael Hewson, chief market analyst at CMC Markets, said there is still doubt about whether inflation has peaked.
“We are in no-man’s-land at the moment in terms of the highest inflation rate, also the reopening of China and the potential tailwinds it could bring. Oil prices are still in headwinds and therefore it is hard to get any direction.” He said.
The three US bond auctions this week are likely to push yields higher as banks and investors prepare to absorb the issuance.
The yield on the 10-year Treasury rose 6.3 basis points at 3.018%.
At Thursday’s European Central Bank meeting, President Christine Lagarde is certain to confirm the end of bond buying this month and the first rate hike in July, although the jury is out on whether that will be 25 or 50 basis points, as it stands With some investment banks. They intensified their expectations. Read more
Money markets are pricing in 130 basis points of price increases by the end of the year, with a 50 basis point move in one full price meeting by October.
The higher number will only heighten expectations of a hard tightening from the Federal Reserve next week, with markets already pricing in half-point increases in June and July and nearly 200 basis points by the end of the year.
The dollar index rose 0.02%, with the euro slipping 0.01% to $1.0718. The yen weakened 0.35% to 131.34 per dollar.
Oil prices rose earlier after Saudi Arabia sharply raised its sales prices of crude oil in July, an indication of how tight supply is even after OPEC+ agreed to speed up production increases over the next two months.
US crude fell 0.18 percent to $ 118.66 a barrel, and Brent crude was down at $119.65, down 0.06 percent on the day.
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Editing by Alex Richardson and John Stonestreet
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