European Shares Set To Follow Wall Street Higher

European stocks may open higher on Monday after Wall Street notched its best day so far in 2022 following another volatile session.

Asian stocks followed Wall Street higher in thin trade, with Chinese and South Korean markets closed for the Lunar New Year holiday.

Investors shrugged off data showing that China’s manufacturing sector expanded at a slower pace in January as a result of a seasonal slowdown, Covid-19 outbreaks and a housing market downturn.

Central bank meetings will be in focus this week as global monetary policy sees a reversal.

The Reserve Bank of Australia announces its policy decision on Tuesday while rate decisions from the European Central Bank and Bank of England are due on Thursday.

The dollar held near an 18-month high and U.S. Treasury yields climbed above 1.20 percent while oil rose more than 1 percent to hover near a seven-year high on supply fears. Gold continued to struggle, hit by higher yields and the hawkish Fed outlook.

The Federal Reserve could raise interest rates by 50 basis points if inflation remains high, Raphael Bostic, president of the Fed’s Atlanta branch, told the Financial Times in an interview.

Investors await the U.S. Labor Department’s monthly jobs report for January along with other reports on manufacturing and service sector activity this week for more clues on the outlook for monetary policy.

On the earnings front, a slew of prominent companies including Alphabet Inc., Amazon.com Inc., Exxon Mobil Corp and Ford Motor will unveil their financial results this week.

U.S. stocks reversed early losses to end sharply higher on Friday as Apple and Visa reported strong quarterly results and weaker-than-expected consumer spending and labor cost readings helped ease inflation fears.

The S&P 500 jumped 2.4 percent, marking its biggest single-day rise since June 2020, and the Dow surged 1.7 percent while the tech-heavy Nasdaq Composite soared as much as 3.1 percent.

European stocks fell sharply on Friday amid fears over the direction for central bank policies and rising geopolitical tensions in Ukraine.

The pan European Stoxx 600 gave up 1 percent. The German DAX lost 1.3 percent, France’s CAC 40 index shed 0.8 percent and the U.K.’s FTSE 100 dropped 1.2 percent.

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