GLOBAL MARKETS – Stocks firm ahead of rate meetings, crude hits $120
Band Huw Jones
LONDON, June 6 (Reuters) – Stocks, the dollar and crude oil rallied on Monday as investors positioned themselves for more direction on interest rates and the economy following a series of central bank meetings that took place on Monday. continued next week.
The European Central Bank meets on Thursday, although it is not expected to start raising interest rates until July, with policymakers from the US Federal Reserve and Bank of England meeting next week.
“There are still doubts about whether or not inflation has peaked,” said Michael Hewson, chief market analyst at CMC Markets.
“We’re in a bit of a no-man’s land right now when it comes to peak inflation, as well as the reopening of China and any possible tailwinds that might come from that. Oil prices are still a headwind and so it’s hard to take a direction,” Hewson said. said.
The week began with some investor appetite for risk as the MSCI All Country Stock Index .MIWD00000PUS gained 0.3%, its recent rebound from near bear market territory still largely intact.
The STOXX index .STOXX of the 600 European companies gained 0.8%. Blue chips in London .FTSE rose 1.2%, ignoring news that British Prime Minister Boris Johnson faces a confidence vote from lawmakers in his ruling Conservative party later on Monday.
Oil prices firmed after Saudi Arabia sharply hiked prices for its crude sales in July, an indicator of supply tightness even after OPEC+ agreed to ramp up production increases over the next two months. WHERE
Brent LCOc1 rose 0.6% to $120.41 a barrel. American crude CLc1 rose 0.55% to $119.53 a barrel.
Gregory Perdon, co-chief investment officer at Arbuthnot Latham, said investors need to weigh downside factors such as inflation, rising rates, the war in Ukraine and a stronger dollar against still accommodative monetary policy, good but slowing economic growth and Chinese recovery.
“I think overall I think taking risk in this environment will be more rewarding than betting against risky assets,” Perdon said.
S&P 500 Futures Contracts ESC1 added 1% and Nasdaq futures NQc1 1.4%, pointing to a higher open on Wall Street.
INCREASE IN ACTIONS IN ASIA
Asia Pacific Equities .MIAPJ0000PUS gained 0.6%, while the Nikkei .N225 in Japan increased by 0.6%.
chinese blue chips .CSI300 climbed 1.9% after a survey confirmed activity in the service sector declined in May, but the Caixin index still improved to 41.4 from 36.2.
The sentiment was bolstered by comments from US Commerce Secretary Gina Raimondo that President Joe Biden has instructed his team to consider lifting some tariffs on China.
Markets will be on edge for the US consumer price report on Friday, especially after EU inflation shocked many with a record high last week.
Forecasts call for a sharp rise of 0.7% in May, although the annual rate should remain at 8.3% while core inflation should slow slightly to 5.9%.
A high number would only add to expectations of aggressive Fed tightening, with markets already pricing in half-point hikes in June and July and nearly 200 basis points (bps) higher. here the end of the year. FEDWATCH
At Thursday’s ECB meeting, President Christine Lagarde is considered certain to confirm an end to bond buying this month and a first rate hike in July, although the jury is out on whether it will be 25 or 50 basis points.
The money markets are forecasting increases of 125 basis points by the end of the year and 100 basis points as early as October.
The prospect of ECB rates turning positive this year helped the euro climb to $1.0731 EUR=away from its recent low of $1.0348, although it struggled to clear resistance around $1.0786.
The euro also hit a seven-year high against the yen at 140.39. EURJPY=after climbing 2.9% last week as the dollar held steady at 130.78 yen JPY= having also gained 2.9% last week.
ING Bank said the gradual re-appreciation of the greenback, supported by rising US rates, should mostly come at the expense of currencies with more uncertain growth prospects such as most European currencies.
Against a basket of currencies, the dollar stood at 101.87 = USD after strengthening by 0.4% last week.
In commodity markets, wheat futures jumped 4% after Russia hit the Ukrainian capital, Kyiv, with missiles, dampening hopes for progress in the peace talks.
Gold was stuck at $1,852 an ounce XUA=after maintaining a narrow range for the past two weeks. GOL/
Asia Pacific Valuationshttps://tmsnrt.rs/2Dr2BQA
(Editing by Sam Holmes, Jacqueline Wong and Alex Richardson)
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