European stocks and US futures rose on Monday, as investors bet that cooling inflation on both sides of the Atlantic would allow central banks to slow the pace of interest rate hikes early this year.
The Stoxx Europe 600 regional index rose 0.4 percent, adding to last week’s gains of 4.2 percent, while the FTSE 100 index in London rose 0.2 percent.
Germany’s DAX rose 0.3 percent after output in the country’s manufacturing, energy and construction sectors increased 0.2 percent between October and November, according to figures from German statistics office Destatis.
Contracts tracking the blue-chip S&P 500 index on Wall Street rose 0.18 percent, and contracts tracking the tech-heavy Nasdaq 100 rose 0.3 percent before the New York open.
US stocks It rose sharply on Friday After US government data showed that average hourly wages of employees rose 4.6 percent year-on-year on a seasonally adjusted basis in December, compared to 4.8 percent in the previous month, easing upward pressure on inflation. The world’s largest economy added 223,000 jobs in the last month of 2022 – more than economists expected but less than the 256,000 job increase in November.
Mark Hefell, chief investment officer at UBS Global Wealth Management, said Fed officials may be “encouraged” by signs that wage growth is beginning to slow, though the job market remains too “tight” for the central bank. to stop interest rate hikes. Cycle.
The Fed last year raised interest rates from nearly zero to between 4.25 percent and 4.5 percent.
Markets are pricing in interest rates around 75 percent for the Fed to raise interest rates by a quarter of a percentage point when it meets at the end of January, with US inflation data released on Thursday expected to show rates rising 6.6 percent year-on-year. year in December, down from an increase of 7.1 percent in November. That would be the slowest pace since October 2021.
A measure of the dollar’s strength against a basket of six peers fell 0.35 percent on Monday. The currency has weakened more than 8 percent over the past three months as traders continue to bet that the Federal Reserve will raise interest rates at a slower rate in the first few months of 2023.
“The US economy remains resilient but on a downward trend,” said Florian Elbeaux, head of macro at Lombard Odier Asset Management. However, slowing inflation in Europe and China’s easing of strict zero-Covid policies meant that “for most risky asset classes, the trend has been the same – globally upward,” he added.
Eurozone inflation fell back to single digits in December, with data published late last week showing the core rate hitting 9.2 per cent after annualized price growth topped 10 per cent in the previous two months.
In Asia, Hong Kong’s Hang Seng rose 1.9 percent, and China’s CSI 300 index of Shanghai and Shenzhen-listed stocks rose 0.8 percent.