Stocks gain as sentiment improves, crude at $120

  • Countdown to the group of central bank meetings
  • Euro rises ahead of Thursday’s European Central Bank meeting
  • Friday’s US CPI will test thinking about Fed increases
  • Oil companies after Saudi Arabia raise prices

NEW YORK (Reuters) – U.S. stocks rose on Monday after gains in Asia and Europe amid signs of easing restrictions by China, and as investors took expected interest rate hikes in the coming days despite crude oil reaching $120. barrel.

The dollar rose against the euro ahead of the European Central Bank’s monetary policy meeting on Thursday but was weaker against commodity currencies – the Canadian, Australian and New Zealand dollars – as risk appetite increased.

Sterling rose ahead of a vote of confidence in Parliament for Prime Minister Boris Johnson after fellow Tory MPs questioned his leadership in the wake of the so-called party scandal. Read more

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The voting is expected to end by eight in the evening local time (1900 GMT) and the result will be announced at a later time.

Mark Chandler, chief market strategist at Bannockburn Global Forex, said a Wall Street Journal report that Chinese regulators are completing investigations into giant Didi Global Inc, as well as easing domestic COVID restrictions, boosted sentiment.

“You have the second largest economy in the world continuing to open up,” he said. “It looks like Didi may be available again in mobile app stores and that Beijing has opened public transportation.”

Didi’s shares rose 37.3% after the Journal report, and the news helped Hong Kong’s Hang Seng tech index close 4.6% higher. Read more.

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The sentiment was also helped by comments from US Commerce Secretary Gina Raimondo that President Joe Biden has asked his team to consider the option of raising some tariffs on Chinese imports. Read more

Chandler said people no longer expect the Federal Reserve to raise interest rates by 75 basis points and pull back a bit from the 50 basis point rise in September, which also boosted sentiment.

Major US stock indexes rose, and so did Britain’s major stock exchanges (.FTSE)Germany (.GDAXI)France (.fchi)Italia (.FTMIB) and Spain (.caribou)all closed at 1% or higher.

Pan-European STOXX 600 Index (.stoxx) It rose 0.92% and the MSCI gauge of stocks worldwide (.MIWD00000PUS.) 0.31% profit.

On Wall Street, the Dow Jones Industrial Average (.DJI) It is down 0.08% after falling briefly. S&P 500 . Index (.SPX) Gain 0.20% and the Nasdaq Composite Index (nineteenth) Added 0.25%. growth stocks (.IGX) It rose 0.3%, or more than double the 0.1% advance in stock value.

US Treasury yields rose as the market prepared to sell $96 billion of debt this week and ahead of data on Friday expected to show US inflation remains hot.

The Consumer Price Index (CPI) is expected to rise 0.7% last month, compared to 0.3% in April, with annual inflation remaining unchanged at 8.3%, according to the median estimate of economists polled by Reuters.

The three US bond auctions this week are likely to push yields higher as banks and investors prepare to absorb the issuance.

The yield on the 10-year Treasury rose 7.9 basis points at 3.034%, the first time that the index’s yields exceeded 3% in nearly three weeks.

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At Thursday’s European Central Bank meeting, President Christine Lagarde is certain to confirm the end of bond buying this month and the first rate hike in July, although the jury is out on whether that will be 25 or 50 basis points, as it stands With some investment banks. They intensified their expectations. Read more

Money markets are pricing in 130 basis points of price increases by the end of the year, with a 50 basis point move in one full price meeting by October.

The higher number will only heighten expectations of a hard tightening from the Federal Reserve next week, with markets already pricing in half-point increases in June and July and about 200 basis points by the end of the year.

The dollar index rose 0.313%, with the euro slipping 0.29% to $1.0688. The yen fell 0.82% to 131.96 per dollar.

Oil prices were largely unchanged in light of trade volatility, buoyed by Saudi Arabia’s July crude price hike, but amid doubts that a target production increase for OPEC+ producers would ease supply tightness.

US crude futures closed down 37 cents at $118.50 a barrel and Brent was down 21 cents to settle at $119.51.

Gold prices fell, weighed down by higher dollar yields and Treasury yields.

US gold futures closed 0.4% lower at $1,843.70 an ounce.

Consumer Price Index in the United States
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(Covering) by Herbert Lash in New York (Additional reporting by Hugh Jones in London) Editing by John Stonestreet and Matthew Lewis

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