Stocks Boost Rise as Inflation Worries Calm
World stocks extended their gains on Monday; As a result of the strong closure of Wall Street on Friday. The price of oil broke the peak, improved the mood, and eased the worries of prolonged inflation. Strong growth in European capital markets; Also increased across Asia after China further eased COVID-19 restrictions; Forcing the MSCI benchmark for global stocks for the third session; to increase by about 0.5%. Investors are hoping for a drop in oil prices from a three-month peak in June; Alleviate price pressures, and allow the U.S. Federal Reserve to tighten policies less aggressively; Than initially feared, which will alleviate the anxiety of the recession.
According to the Prime Partners Fund Manager, there is a better chance of seeing oil prices fall, only to slow down the economy due to declining demand from Europe, the U.S., and China. This will aid in lower inflation expectations, At least till the finish of this part this year. The upcoming meeting of the Fed in July will be very important. It is expected that the Fed will continue to raise rates, Probably 75 basis points. However, the new message will be more crucial.
Although a strong three-day recovery helped push the MSCI world mark further away from hitting earlier this month, the index fell more than 20% to a record close in January. A fall is mainly alleged as a bear market. Traders said the surplus market conditions and the portfolio rebalancing at the end of the month also helped the rise. However, they expected more volatility as the second quarter win season approached.
Stocks and Inflation
MSCI’s broadest Asia-Pacific stock index rose 1.5%. Beijing said on Saturday it would allow schools to resume personal lessons. Shanghai’s main party boss also announced victory at COVID-19. The city has reported zero new local cases for the first time in two months. The STOXX 600 benchmark added 0.6%. The easing of COVID restrictions in China, a major consumer of metals, has strengthened miners. Meanwhile, U.S. stock index futures extended their earnings on the S&P 500 e-minis; By about 0.4%.
It is expected that instability is likely to remain elevated; Until we see convincing evidence that inflation is moderating. The recession risks are also declining, and geopolitical threats are being reduced, especially from restrictions on Russian energy exports.
According to UBS, the S&P will close at the current level of 3900 points in 500, With the “soft access” scenario of the economy. However, if the deterioration of macro data leads to a decrease in the revenue growth forecast in line with the average rates of recession, Then the index will fall to 3300. Oil has been volatile since last week’s route; Because the market is concerned about an economic slowdown and sanctions for the loss of Russian supplies due to the conflict in Ukraine.
Brent crude rose 0.4% to $113.53. It fell on Friday after its biggest one-week drop since April. U.S. Treasury’s 10-year revenue exceeded 3%. Traders took out bets on hikes next year. However, they still thought about aggressive tightening this year. They increased by three basis points by 3.171%. This reached an 11-year high earlier this month. The 10-year German government bonds yield, the Eurozone benchmark, rose to 1,544% by ten basis points.
The dollar has consolidated since the middle of the month compared to the lowest mark; Among key peers. Traders reconsidered the prospects for gaining aggressive rates. The dollar index fell 0.1% to 103.94. Gold rose to $1,837.3 an ounce, for a total of 0.6%. Bitcoin rose to $21,409 and moved 1.2%.
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