European equities rose Monday after a broadly positive Asian performance while gold soared to a new record peak at the start of a busy week that will include a eurozone interest rate decision and key US inflation data.
Most Asian markets squeezed out gains as traders weighed the chances of the US Federal Reserve cutting interest rates this year after a forecast-busting US jobs report dented hopes for a first move in June.
“The sense of optimism could stem from the fact the week holds a lot of big events, including the European Central Bank’s interest rate decision on Thursday,” said Sophie Lund-Yates, lead equity analyst at stockbroker Hargreaves Lansdown.
“There’s an expectation that (ECB) rates will be held at 4.5 percent, and even more important will be the commentary around the decision, as investors look for clues of cuts coming in summer.”
Gold prices spiked as high as $2,353.95 per ounce on Monday to extend its record-busting streak, buoyed by its haven qualities amid ongoing Middle East turmoil.
Oil subsided but remained within grasp of recent five-month peaks.
Later this week, market participants will also seize Wednesday upon hotly-awaited US inflation data that could shed light on the Fed’s monetary policy outlook.
Wall Street’s three main indexes rallied Friday following news that 303,000 jobs were created in the United States in March, with investors focusing on the positives for the economy instead of monetary policy implications.
However, observers warned that the figures — which also showed unemployment falling and wage growth still strong — could prevent the Fed from cutting rates three times in 2024, as it has previously indicated.
Traders are also awaiting the release this week of minutes from the Fed’s most recent meeting, as well as the consumer price index inflation reading.
The CPI “will be a bigger test of whether the recent inflation bump is a trend or not”, said Saxo’s Redmond Wong, referring to bigger-than-expected inflation figures at the start of the year.
There is now growing talk that the Fed will not even be able to cut rates three times this year, with some suggesting that if data continued to come in strong then officials could face pressure to hold off until 2025.
– Key figures around 1050 GMT –
London – FTSE 100: UP 0.1 percent at 7,920.73 points
Paris – CAC 40: UP 0.6 at 8,108.35
Frankfurt – DAX: UP 0.6 percent at 18,288.09
EURO STOXX 50: UP 0.5 percent at 5,037.68
Tokyo – Nikkei 225: UP 0.9 percent at 39,347.04 (close)
Hong Kong – Hang Seng Index: UP 0.1 percent at 16,732.85 (close)
Shanghai – Composite: DOWN 0.7 percent at 3,047.05 (close)
New York – Dow: UP 0.8 percent at 38,904.04 (close)
Dollar/yen: UP at 151.89 yen from 151.61 yen on Friday
Euro/dollar: DOWN at $1.0829 from $1.0841
Pound/dollar: DOWN at $1.2627 from $1.2637
Euro/pound: UP at 85.76 pence from 85.75 pence
Brent North Sea Crude: DOWN 0.9 percent at $90.35 per barrel
West Texas Intermediate: DOWN 0.9 percent at $86.10 per barrel
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