European stock markets opened higher on Monday and global stocks remained at their highest level in more than two yearswhile Investors were waiting for US inflation data due this week to give clues about when the US Federal Reserve might cut rates.
The S&P 500 surpassed 5,000 points for the first time in its history last week, boosted by technology stocks, and global equities are up for three consecutive weeks, even though US Treasury yields have risen lately , as investors have lowered their expectations about how quickly the Federal Reserve could cut rates.
With most major Asian markets closed for holidays, analysts said they expected a quiet day in the markets as traders await Tuesday’s US inflation data as well as British inflation data. and Eurozone GDP on Wednesday.
“Markets are reducing expectations for rate cuts,” said Kiran Ganesh, multi-asset strategist at UBS, adding that markets were pricing in fewer than five US cuts this year, down from six or seven at the start of the year. .
“The equity market has remained relatively immune to this, because the reason we have seen less expectations of interest rate cuts has been due to stronger economic growth which, of course, is also good for the economy.” variable income”.
Strong US jobs data in early February led investors to lower expectations of a Fed rate cut at its next meeting, with markets pricing in an 84.5% chance of rates remaining unchanged. in March.
At 0857 GMT, the MSCI global equity index, which tracks stocks in 47 countries, was almost unchanged on the day, having hit its highest since January 2022 earlier in the session.
The pan-European STOXX 600 index rose 0.3%, after remaining relatively stable in February but gaining 1.4% in January. London’s FTSE 100 was little changed, and Germany’s DAX rose 0.2%.
According to Ganesh, the equity rally was concentrated in a few stocks, as enthusiasm around artificial intelligence boosted technology stocks.
“I wouldn’t be surprised to see a period of consolidation in the coming weeks or months,” he said, adding that he remained “very optimistic” about the artificial intelligence trend.
The dollar index was up about 0.1% at 104.130, and the euro was slightly lower at $1.0774, after hitting a 10-day high earlier in the session.
The Japanese yen, which has weakened as expectations of a US rate cut eased, was stable at 149.190 per dollar.
Investors have also lowered their expectations for rate cuts from the European Central Bank, after two policymakers said last week that the ECB needs more evidence that inflation is easing before it can cut rates.
Euro zone government bond yields, which rose strongly last week, fell slightly on Monday, with the German benchmark 10-year yield falling one basis point to 2.373%.
Oil prices fell after Israel said it had “concluded” a series of attacks in southern Gaza, slightly easing concerns about supplies from the Middle East.
Crude oil futures Brent They were down 0.5% at $81.82 per barrel and West Texas Intermediate crude oil futures were down 0.5% at $76.46 per barrel.
Gold fell slightly to $2,022.6 an ounce.
Markets in China, Hong Kong, Japan, South Korea, Singapore, Taiwan, Vietnam and Malaysia remained closed for holidays.
Financial markets in mainland China are closed for the Lunar New Year holiday and will resume trading on Monday, February 19. Trading in Hong Kong will resume on February 14.
Source: Ambito
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