Wall Street gains, European stocks rise after week of rout

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  • Shares of Facebook owner Meta continue to fall
  • ECB President calms some fears over rate hike
  • Oil drops on progress of US-Iran talks

WASHINGTON/LONDON, Feb 7 (Reuters) – Wall Street stocks gained on Monday and European stocks rose after five straight weeks of declines as European bond yields rose on speculation of monetary tightening.

Markets are on high alert for rate hikes in both the euro zone and the United States after the ECB was seen last week as having adopted a more hawkish tone. The United States released stronger-than-expected employment and earnings data. Read more

On Monday, European Central Bank President Christine Lagarde eased some of those worries, saying there were no signs that a measurable tightening of monetary policy would be needed. Read more

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Major Wall Street stock indexes were higher in choppy trading as markets digested mixed quarterly results from megacaps Amazon.com Inc and Facebook owner Meta Platforms (FB.O). Read more

The Dow Jones Industrial Average (.DJI) rose 186.22 points, or 0.53%, to 35,275.96, the S&P 500 (.SPX) gained 14.26 points, or 0.32%, to 4,514.79 and the Nasdaq Composite (.IXIC) added 39.26 points, or 0.28%, to 14,137.27 as of 2:36 p.m. EST.

Meta shares fell 4.3%, extending losses for the third session after their record drop last week. Peloton (PTON.O) jumped on interesting media reports from potential buyers, including Amazon. Read more

Despite widespread bearish sentiment, “we see volatility moderating and expect strong equity inflows from systematic investors (e.g. risk parity, volatility targeting), as well as buybacks companies rising after recent earnings-related blackouts,” JP Morgan analysts said in a statement. market note.

In Europe, stocks rose after a weeks-long rout, with gains in mining stocks and positive earnings outweighing fears of an impending policy crunch cycle and geopolitical tensions.

The pan-European STOXX 600 (.STOXX) rose 0.7% after falling more than 5% this year, following steep declines in tech stocks (.SX8P) as broad inflationary pressures sparked hawkish comments from the main central banks.

Mining stocks (.SXPP) were among the best performers on the day, rising 1.7% after positive comments from major commodity importer China sent metal prices higher.

Britain’s FTSE (.FTSE) gained 0.91%. read more After a bumpy ride last week, the MSCI Global Equity Index (.MIWD00000PUS) rose 0.2%.

Eurozone bond yields rose, with Germany’s 10-year government bond yield, the eurozone benchmark, up 2 basis points to 0.22%, its all-time high. since January 2019.

The yield on Italian 10-year bonds rose 5.5 basis points to 1.814%, after hitting a new high since May 2020 at 1.901%, as traders positioned themselves for faster-than-expected monetary tightening that would hurt more of bonds in the most indebted countries. They gave back some gains as the selling slowed.

Italy and Greece continue to have “buffers” in place to protect them from rising borrowing costs and there is a reasonable chance that Greece’s credit rating will soon be upgraded, the report told Monday. Reuters one of S&P Global’s leading analysts.

“The most dominant thing is still central banks and the tightening we see there, which has led to volatility,” said Matthias Scheiber, global head of portfolio management at Allspring Global Investments.

ECB policymaker Martins Kazaks pushed back on market expectations for a rate hike as early as July in an interview with Reuters. He said the bank could end its stimulus program sooner than expected, but was unlikely to raise its main interest rate as quickly. Read more

Klaas Knot, president of the Dutch central bank and member of the ECB’s governing council, said on Sunday that he expects a rise in the fourth quarter of this year. Read more

The benchmark 10-year US Treasury yield fell slightly. The two-year US Treasury yield, which generally moves in line with interest rate expectations, was down.

The euro edged down 0.1%, after jumping 2.7% last week in its best performance since the start of 2020 on tightening expectations. Read more

The US dollar index was little changed, after losing 1.8% last week.

The US payrolls report for January showed on Friday that annual growth in average hourly wages rose to 5.7% from 4.9%, while payrolls in previous months were revised up by 709 000 to radically change the hiring trend.

US consumer price figures for January are due on Thursday and could show core inflation accelerating at the fastest pace since 1982 to 5.9%.

As a result, markets moved to price-fix with a one-in-three chance that the Fed could hike 50 basis points in March and the rate outlook hitting 1.5% by the end of the year.

Oil prices fell from seven-year highs on Monday as worries about tight supplies were offset by signs of progress in nuclear talks between the United States and Iran, which could lead to the US sanctions on Iranian oil sales lifted.

Brent crude weakened to $92.67 a barrel, while US crude fell to $91.27.

Elsewhere in commodities, gold hit more than a week high, supported by inflation concerns and lingering geopolitical risks. Spot prices rose 0.85% and US gold futures rose 0.8% to $1,821.80.

China came back from the Lunar New Year break with jumps in stocks and commodities: the blue-chip CSI300 (.CSI300) and the Shanghai Composite (.SSEC) rose 1.54% and 2% respectively and metals and iron ore rebounded in Shanghai.

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Reporting by Chris Prentice; edited by Philippa Fletcher and Nick Zieminski

Our standards: The Thomson Reuters Trust Principles.

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