In the opening hours of trading on Monday, European stock indices marginally increased on hopes that inflation has peaked and markets have reduced their expectations for further Fed rate hikes.
Liquidity was low overnight due to markets being closed in China, Hong Kong, Singapore, Malaysia, South Korea, and Taiwan for the Lunar New Year holiday.
The MSCI World Equity index was up 0.334% on the day, remaining close to last week’s highs.
The STOXX 600 in Europe and the FTSE 100 in London were up 0.2% daily.
Hopes that the global economic downturn won’t be as severe as previously predicted have been raised by signs of easing inflation, declining commodity prices, and the relaxation of China’s COVID-19 restrictions so far this year.
The likelihood that the Fed will increase rates by 25 basis points next month is priced at 98,34%, with the likely peak falling from 4.25% to 4.50% to 4.75% to 5.0%.
After a surge in Netflix and Alphabet shares at the end of the previous week, Wall Street rallied.
Investors are anticipating flash PMI data from the Eurozone and the United States. The data is expected to improve more in Europe than in the United States.
DXY Drops 0.3%
The US dollar index was down about 0.3% at 101.59. After reaching a nine-month high of $1.0927, the euro was up 0.6% at $1.0918, helped by falling natural gas prices.
The Australian dollar, which is used as a liquid proxy for risk appetite, increased by 0.6% to $0.701, while the British pound increased by 0.1% to $1.2409.
After fluctuating last week due to the Bank of Japan rebuffing market pressure to loosen its ultra-easy monetary policy, the dollar increased 0.2% against the yen to 129.815 this week.
The benchmark 10-year German yield remained unchanged at 2.19% in the Eurozone.
Oil prices rose marginally, with Brent crude up 0.5% and US crude up 0.4%.