2/2 © Reuters. ARCHIVE PHOTO: Pedestrians wearing protective masks are reflected on an electronic whiteboard showing the stock prices of several companies outside a brokerage in Tokyo, Japan, February 25, 2022. REUTERS / Kim Kyung-Hoon
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By Danilo Masoni and Kevin Buckland
MILAN / TOKYO (Reuters) – Global stocks extended their rebound on Monday, based on the strong closing of Wall Street on Friday, as oil prices in peak hours helped ease sentiment and quell fears of prolonged inflation.
Strong morning gains in Europe and a rebound in Asian markets after China further eased COVID-19 restrictions boosted MSCI’s benchmark for global stocks for the third straight session, up 0.5 % at 0851 GMT.
Investors hope that the fall in oil prices from the three-month highs reached in early June could ease price pressures and allow the US Federal Reserve to tighten policy less aggressively than initially feared, reducing the risk of an economic recession.
“We believe there is a better chance of seeing oil prices fall simply because of reduced demand from the US, Europe and China due to the slowdown in the economy. This in turn should help reduce inflation expectations at least until the end of this period. year, “said Jérôme Schupp, Prime Partners fund manager in Geneva.
“The next Fed meeting in July will be quite important. We should see the Fed continue to raise rates, probably by 75 basis points. But more crucial will be the new message from (Fed Chairman Jerome) Powell. Maybe will say I’m happy with the new level of tariffs, “Schupp added.
Despite the sharp three-day rise that has helped MSCI’s world benchmark distance beyond the November 2020 lows reached earlier this month, the index continues to fall more than 20% from its record high closed in January, a fall commonly described as a bear market.
Traders said oversold market conditions and the rebalancing of the portfolio at the end of the month also contributed to the rebound, although they expected more volatility as the second quarter earnings season approaches.
MSCI’s broader Asia-Pacific stock index rose 1.6%. Beijing said on Saturday it would allow schools to resume face-to-face classes and Shanghai’s top party leader declared victory over COVID-19 after the city noticed zero new local cases for the first time in two months.
The pan-regional benchmark rose more than 1% as easing restrictions in China increased oil and mining stocks. Meanwhile, US stock index futures expanded their gains with a gain of around 0.6%.
Oil was volatile as the market struggled with concerns about an economic slowdown as opposed to concerns about the loss of Russian supply amid sanctions over the Ukraine conflict.
prices rose 0.2% to $ 113.36 a barrel and US West Texas Intermediate futures fell 0.1% to $ 107.52 a barrel.
it stood just above 3% as traders withdrew their bets to go up next year, but still reflected on this year’s aggressive hardening. They rose 2 basis points to 3.16%, below a 11-year high reached earlier this month.
“The market remains focused on offsetting the political response to high inflation and fears of a strong landing,” Westpac rate strategist Damien McColough wrote in a note.
“There will be ongoing discussions on whether long-term yields have peaked, but we still do not expect 10-year yields to fall materially or sustainably below 3%,” he added.
The dollar continued to consolidate near its lowest level since mid-month against major peers as traders revalued the outlook for aggressive rate hikes.
The – which measures the currency against six rivals – fell 0.2% to 103.82.
Gold rose 0.7% to $ 1,838.8 an ounce, backed by news from some Western nations planning to officially ban metal imports from Russia for their invasion of Ukraine.
it was flat, trading at $ 21,170.88 after falling to $ 17,588.88 earlier this month.