International equities rose broadly amid no further inflation and interest rate news, while US markets were closed for the June 16 bank holiday.
Stocks and bonds have been battered globally this year. Driving the sell-off are efforts by the Federal Reserve and other central banks to stifle inflation, and fears that higher borrowing costs could tip economies into recession.
This week, investors will analyze Fed Chairman Jerome Powell’s comments to Congress on Wednesday and Thursday. They will be looking for clues on the chances of a second consecutive three-quarter point interest rate hike in July. Data on housing, manufacturing output and consumer sentiment will help traders gauge the strength of the economy, as inflation hits its highest rate in over 40 years.
US stock and bond markets were closed for the first time on Monday for the June 16 public holiday. The S&P 500 suffered its biggest percentage decline since the March 2020 Covid-19 crash last week after the Fed’s decision to raise interest rates by three-quarters of a point spooked investors .
Cryptocurrencies stabilized after volatile weekend trading. Bitcoin changed hands at $20,795, 1.4% higher than its level at 5 p.m. Sunday. Digital currencies have crashed in recent weeks and major cryptocurrencies have laid off staff.
In raw materials, natural gas prices jumped 5.1% to 123.75 euros, or about 130 dollars, per megawatt hour in Europe. Russia continued to pump gas well below full capacity via Nord Stream to Germany.
Edward Park, Chief Investment Officer at Brooks Macdonald,
expects investors to return to stocks and other riskier assets this week, encouraged by the lack of US inflation data. He said equities would remain volatile until energy markets begin to fall, easing pressure on central banks to rein in consumer price gains.
Brent crude oil futures edged up 0.4% to $113.56 a barrel, stabilizing after a sharp decline that began on Friday. Fears that a possible recession would weigh on oil demand led prices to post a four-week streak of gains.
The Stoxx Europe 600 index rose 1% on Monday. Gains in banks and travel and leisure companies offset losses in construction and materials stocks.
France’s CAC 40 edged up 0.6% after President Emmanuel Macron lost his majority in the National Assembly. The results of the legislative elections will make it difficult for the French leader to advance his pro-business agenda.
Among individual European stocks, Renault rose 9.7% after Jefferies analysts raised their price target for the French automaker. Kingspan Group,
an Irish producer of building and insulation materials, fell 13% after saying trading conditions had deteriorated over the past two months.
In Asia, the South Korean Kospi falls by 2%, weighed down by Samsung Electronics,
which fell after analysts at DB Financial Investment cut the stock’s target price. Japan’s Nikkei 225 lost 0.7%. China’s Shanghai Composite Index was flat and Hong Kong’s Hang Seng edged up 0.3%.
Write to Joe Wallace at [email protected]
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