Stocks see little gains, dollar rises as inflation soars

  • Europe’s STOXX 600 up 0.3%
  • Banks, auto stocks gain
  • Wall Street prepares to reflect the advances
  • Dollar rises to two-week high against yen

LONDON/SINGAPORE, June 1 (Reuters) – European stocks posted slight gains on Wednesday, with the dollar strengthening as investors worried about rising inflation and the impact on global growth of impending rate hikes. of interest.

The European STOXX 600 Index (.STOXX) was up 0.3%, and the London (.FTSE) and Paris (.FCHI) stocks were up 0.2% and 0.4%, respectively.

Bank (.SX7P) and auto (.SXAP) stocks rose, although data showed German retail sales fell more-than-expected in April as consumers feel pressure from higher prices. read more

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Rising food and energy costs pushed euro zone inflation to a record 8.1% in May, figures showed on Tuesday, stoking concerns about rate hikes not just in Europe but throughout the world. read more

The Bank of Canada is the latest central bank to raise interest rates, with economists expecting a 1.0% rise to 1.5% later on Wednesday. read more

Market players were on the lookout for whether attempts to tame inflation by central banks around the world with tighter monetary policy would trigger recessions, which in turn could cause rate hikes to slow.

“It’s an incredibly uncertain environment right now,” said Mike Bell, global market strategist at JP Morgan Asset Management. “At times like that, it makes sense to just temper the size of one’s risk positions.”

Investors were also concerned, Bell said, about whether a European Union agreement on an embargo on imports of Russian crude oil would provoke retaliation from Moscow. The ban aims to stop 90% of Russia’s crude oil imports to the 27-nation bloc by the end of the year. read more

Wall Street was ready to repeat the gains in Europe. S&P 500 futures rose 0.4%, strengthening in London trading.

The MSCI World Equity Index (.MIWD00000PUS), which tracks stocks in 50 countries, was flat.

Previously, Shanghai blinked out of a two-month lockdown, but with data showing sharp declines in factory activity in Asia due to declining demand from China, the relief in the region was short-lived. read more

MSCI’s broader index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) fell 0.4%, dragged down by Hong Kong’s Hang Seng Index (.HSI).

Euro zone bond yields fell in early trading after rising on Tuesday after inflation data from the bloc came in much higher than expected.

As global inflation concerns flared again, the US dollar rose to a two-week high against the yen, buoyed by higher Treasury yields. The dollar halted a three-week slide and hit a two-week high of 129.23 yen.

The dollar index, which measures the currency against six major pairs including Japan, rose 0.2% to 102.05, extending a 0.4% rally from Tuesday.

TURNS

The US Federal Reserve begins to reduce asset holdings accumulated during the pandemic on Wednesday. Traders expect him to hike rates by 50bps at meetings this month and next and are unsure and increasingly worried after that.

St. Louis Fed President James Bullard and New York Fed President John Williams will also speak on Wednesday and will be watched for clues on the outlook.

“We’re in this kind of twilight zone right now where it’s very difficult to understand what the Fed is going to do after the July meeting,” said Moh Siong Sim, an analyst at the Bank of Singapore.

“Depending on who says what and how the data develops, there will be a lot of twists and turns in the coming weeks.”

In commodity markets, oil prices inched higher after the EU agreement on a partial and gradual ban on Russian oil and when the COVID-19 lockdown on Shanghai ended.

Brent crude futures rose 0.3% to $115.95 a barrel.

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Reporting by Tom Wilson in London and Tom Westbrook in Singapore; Edited by Sam Holmes and Emelia Sithole-Matarise

Our standards: the Thomson Reuters Trust Principles.

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