HomeBusinessStocks gain on improving sentiment, crude at $120

Stocks gain on improving sentiment, crude at $120

  • Countdown to series of central bank meetings
  • Euro rises ahead of Thursday’s ECB meeting
  • US CPI on Friday to test thinking on Fed hikes
  • Oil companies after Saudi Arabia raises prices

NEW YORK/LONDON, June 6 (Reuters) – Wall Street stocks rose on Monday, following gains in Asia and Europe on signs of an easing of restrictions by China, and as investors took the rises interest rate hikes forecast in the coming days despite crude oil hitting $120 a barrel.

The dollar was little changed against the euro ahead of a European Central Bank policy meeting on Thursday, but weakened against the commodity currencies – the Canadian, Australian and New Zealand dollars – as appetite for the risk increased.

A Wall Street Journal report that Chinese regulators are concluding investigations into ride-hailing giant Didi Global Inc and the easing of national COVID restrictions boosted sentiment, said Marc Chandler, chief market strategist at Bannockburn Global Forex. .

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“You have the second largest economy in the world which continues to open up,” he said. “It seems that Didi is available again in mobile app stores and Beijing has opened public transport.”

Shares of Didi jumped 52.2% on the Journal’s report, and the news helped Hong Kong’s Hang Seng Technology Index close up 4.6%. Read more .

Sentiment was also bolstered by comments from US Commerce Secretary Gina Raimondo that President Joe Biden has instructed his team to consider lifting some tariffs on Chinese imports. Read more

People are no longer talking that the Federal Reserve could raise interest rates by 75 basis points and pulled back a bit from a 50 basis point hike in September, which also boosted sentiment, Chandler said. .

Major US stock indices rose around 1% or more, as did major national indices for Britain (.FTSE), Germany (.GDAXI), France (.FCHI), Italy ( .FTMIB) and Spain (.IBEX).

The pan-European STOXX 600 index (.STOXX) rose 1.22% and the MSCI gauge of stocks across the world (.MIWD00000PUS) gained 1.15%.

On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.94%, the S&P 500 (.SPX) gained 1.36% and the Nasdaq Composite (.IXIC) gained 1.73%. Growth stocks (.IGX) rose 1.8%, more than double value stocks’ 0.9% gain.

U.S. Treasury yields rose as the market braced for the sale of $96 billion in debt this week and ahead of Friday’s data expected to show U.S. inflation still on the rise.

The consumer price index (CPI) is expected to have gained 0.7% last month, from 0.3% in April, with annual inflation unchanged at 8.3%, according to the median estimate of economists polled by Reuters.

Michael Hewson, chief market analyst at CMC Markets, said there were still doubts about whether inflation had peaked.

“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 tailwinds that might come from that. Oil prices are still a headwind and so it’s hard to take a direction,” he said. said.

The three U.S. debt auctions this week are expected to push yields higher as banks and investors prepare to absorb the issue.

The yield on 10-year Treasury bills rose 6.3 basis points to 3.018%.

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, as some investment banks raised their expectations. Read more

Money markets are forecasting rate hikes of 130 basis points by the end of the year, with a fully priced 50 basis point move in a single meeting by October.

A high number would only add to expectations of aggressive Fed tightening next week, with markets already pricing in half-point hikes in June and July and nearly 200 basis points (bp ) by the end of the year.

The dollar index rose 0.02%, with the euro falling 0.01% to $1.0718. The yen weakened 0.35% to 131.34 to the dollar.

Oil prices rose earlier after Saudi Arabia sharply hiked prices on its crude sales in July, an indicator of supply tightness even after OPEC+ agreed to accelerate oil price increases. production over the next two months.

U.S. crude fell 0.18% to $118.66 a barrel and Brent to $119.65, down 0.06% on the day.

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Editing by Alex Richardson and John Stonestreet

Our standards: The Thomson Reuters Trust Principles.

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