Stocks mixed, dollar firms before central bank rate decisions
Major European and Asian stock markets traded mixed Monday, the start of a week set to be dominated by central bank decisions on interest rates amid surging inflation.
“Equity markets appear to be adopting a glass half full approach to recent events, even as US inflation came in at its highest levels in 39 years on Friday, amidst a backdrop of increasing concern that central banks are massively behind the curve,” said CMC Markets analyst Michael Hewson.
The Federal Reserve, Bank of Japan, Bank of England and European Central Bank are all meeting over monetary policy this week.
The spread of the Omicron coronavirus variant could see the major central banks sit tight and delay raising interest rates despite soaring prices, according to analysts.
Wall Street hit a fresh record high Friday despite the latest spike in US consumer prices, while the market expects the Fed to raise interest rates at least twice in 2022.
“Global equities had a solid run last week and we’ll see if the goodwill lasts,” said Chris Weston, head of research with Pepperstone Financial.
Any moves by the Fed, along with new developments in the Omicron variant, should dictate sentiment, he said.
The dollar on Monday made solid gains against major rivals, including the British pound which, like the FTSE 100 stocks index, was weighed down by Prime Minister Boris Johnson’s warning of a looming “tidal wave” of Omicron.
Johnson has brought forward a target and now wants to give all UK adults a booster jab by the new year.
A group of airlines on Monday accused the UK government of a “haphazard and disproportionate approach” to travel restrictions in the wake of Omicron and demanded further state help to prevent a “permanent scarring” of the industry.
Elsewhere on the corporate front, Chinese artificial intelligence start-up SenseTime said it was postponing a planned $767-million initial public offering in Hong Kong after it was blacklisted by the United States over human rights concerns in Xinjiang.
It filed a statement with the Hong Kong stock exchange saying it would postpone its listing “to safeguard the interests of the potential investors” as they weigh the impact of being placed on the blacklist.
– Key figures around 1130 GMT –
Frankfurt – DAX: UP 1.0 percent at 15,780.89
Paris – CAC 40: UP 0.2 percent at 7,007.10
EURO STOXX 50: UP 0.8 percent at 4,232.75
Tokyo – Nikkei 225: UP 0.7 percent at 28,640.49 (close)
Hong Kong – Hang Seng Index: DOWN 0.2 percent at 23,954.58 (close)
Shanghai – Composite: DOWN 0.4 percent at 3,681.08 (close)
New York – Dow: UP 0.6 percent at 35,970.99 (close)
Euro/dollar: DOWN at $1.1275 from $1.1313 Friday
Pound/dollar: DOWN at $1.3254 from $1.3273
Euro/pound: DOWN at 85.07 pence from 85.24 pence
Dollar/yen: UP at 113.68 from 113.44 yen
Brent North Sea crude: DOWN 0.3 percent at $74.90 per barrel
West Texas Intermediate: DOWN 0.3 percent at $71.45 per barrel