On Monday, the main European stock markets began the session higher, supported by the hope of an easing of the Federal Reserve and an improvement of the covid-19 in China.
Investor sentiment improved considerably last week, to the point where they began to take more risk again, as even though the potential recession that is looming is still scary, the actions taken by central banks are less scary.
Wall Street up sharply at close Friday
The New York Stock Exchange closed sharply higher on Friday, buoyed by investors’ downward revision of expectations for U.S. rates. The Dow Jones index gained 2.68%, the S&P-500 gained 3.06% and the Nasdaq Composite advanced 3.34%.
This development has allowed Wall Street to record a positive performance over the week for the first time in a month since the S&P-500 posted a rebound of 6.46%, the Dow Jones gained for its part, still over the week, 5.4% and the Nasdaq 7.49%.
This momentum was driven by the release of a slightly lower-than-expected medium-to-long-term inflation indicator in the U.S. and optimistic statements on the economy from a U.S. Federal Reserve official.
Asia follows suit
On the Tokyo Stock Exchange, the Nikkei climbed 1.66%, driven by the heavyweights in the semiconductor sector, following Wall Street.
In China, the Shanghai SSE Composite is up 0.76% and the CSI 300 is up 1.07% thanks to positive news on the covid-19 epidemic. Indeed, the authorities of the city of Shanghai announced on Sunday the reopening of restaurants in some areas, after the absence of new cases transmitted locally for the first time in two months. Beijing had announced the day before the resumption of classes in primary and secondary schools in the capital.
The Hong Kong stock market gained more than 3% on Monday, reassured by the prospect of a possible deceleration of inflation in the United States. The Hang Seng Index rose 3.15%, its highest level since early April.
The gains were also buoyed by hopes that the Chinese authorities’ tightening of the screws on the technology sector is coming to an end. “More and more investors are recognizing that China’s regulatory environment is becoming favorable and that there will be further stimulus to the economy,” said Vey-Sern Ling of Union Bancaire Privée.
Markets are also benefiting from the largest injection of liquidity into the banking system by the People’s Bank of China in nearly three months.
In Paris, the CAC 40 gained 1.34% on Monday morning. In London, the FTSE 100 is up 0.84% and in Frankfurt, the Dax is up 1.85%. The EuroStoxx 50 index is up 1.72%, the FTSEurofirst 300 up 1.08% and the Stoxx 600 up 1.34%.
This week, the markets will be watching for statements from Sintra, Portugal, where the European Central Bank is scheduled to open its annual three-day forum later today.
The institution’s president will give her welcome speech and speak again on Tuesday morning, while her Fed counterpart, Jerome Powell, will speak on Wednesday. The rest of the week will also see the release of key indicators including monthly household income and spending data in the US on Thursday, including the PCE consumer price index, which is closely followed by the Fed, and the first estimate of inflation in the euro zone in June.
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Featured photo : © Kennedy Ebiziem