European stocks and US futures rose on Monday, as investors believed that cooling inflation on either side of the Atlantic would allow central banks to slowly raise interest rates early this year.
Europe’s regional Stoxx 600 rose 0.4 percent, adding to last week’s 4.2 percent gain, while London’s FTSE 100 rose 0.2 percent.
Germany’s Dax gained 0.3 percent after production in the country’s manufacturing, energy and construction sectors increased 0.2 percent between October and November, according to figures by Destatis, Germany’s statistics office.
Contracts tracking Wall Street’s blue-chip S&P 500 added 0.18 percent and those tracking the tech-heavy Nasdaq 100 rose 0.3 percent before the New York open.
US equities rose sharply on Friday after US government data showed average hourly earnings of employees rose 4.6 percent annually on a seasonal basis in December, compared with 4.8 percent in the previous month, easing inflationary pressures. The world’s largest economy added 223,000 jobs in the final month of 2022 – more than economists had expected but less than the 256,000 increase in November.
Federal Reserve officials will be “encouraged” by signs that wage growth is starting to slow, said Mark Haefele, chief investment officer at UBS Global Wealth Management, although the labor market remains “tight” for the central bank to pause rate hikes. bicycle; Bicycle; ontel.
The Fed last year raised interest rates from near zero to between 4.25 percent and 4.5 percent.
The rate market is pricing in a roughly 75 percent chance the Fed will raise rates by a quarter of a percentage point when it meets in late January, with US inflation data out on Thursday expected to show prices rose 6.6 percent year-on-year in December, down from a 7.1 percent rise. in November. This will mark the slowest since October 2021.
A measure of the dollar’s strength against six peers fell 0.35 percent on Friday. The currency has fallen more than 8 percent over the past three months as traders continue to speculate that the Federal Reserve will raise rates at a slower clip in the first few months of 2023.
“The US economy remains resilient but is on a downward trend,” said Florian Ielpo, head of macro at Lombard Odier Asset Management. Even so, inflation slowing in Europe and China’s relaxation of its strict zero-Covid policy means that for “the asset class with the most risk, the direction is the same – global up”, he added.
Euro zone inflation fell back to single digits in December, with data published late last week showing the headline rate reached 9.2 percent after annual price growth exceeded 10 percent for the previous two months.
In Asia, Hong Kong’s Hang Seng index rose 1.9 percent and China’s CSI 300 index of Shanghai and Shenzhen shares rose 0.8 percent.