European and Asian stocks made gains on Monday after the best week for global equities since mid-March.
The FTSE All-World index snapped a seven-week losing streak on Friday, driven by the best performance for Wall Street’s benchmark S&P 500 since November 2020, after softening economic data encouraged investors that the Federal Reserve could slow its tightening of monetary policy.
Asian markets followed the ascent of US stocks in the previous session for a strong start to the week. Hong Kong’s Hang Seng index and Japan’s Topix rose 2.1 and 1.9 per cent, respectively. In Europe, the regional Stoxx 600 climbed 0.7 per cent, the FTSE 100 added 0.5 and Germany’s Dax index rose 0.8 per cent.
In bond markets, Germany’s 10-year Bund yield rose 0.06 per cent to 1.02 per cent, as the price of the debt instrument — seen as a proxy for European borrowing costs — fell.
The moves came as central banks are engaging in the most widespread tightening of monetary policy for more than two decades, according to a Financial Times analysis, in an effort to tame inflation provoked by the war in Ukraine, tightened global supply chains and a rebound in demand.
With US markets closed for a public holiday on Monday, attention will turn to European economic data, where the publication of German consumer price index data will also indicate the extent to which inflation is rising in the eurozone.
Inflation is expected to reach a new 40-year high of 8 per cent in the eurozone’s largest economy. Continent-wide figures will be published on Tuesday.
Investors will also look for signs of cooling in the US jobs market when the country reports unemployment data on Friday. A hot labour market has been a driver of climbing prices in the world’s biggest economy.
The US dollar, which is typically perceived as a haven asset and is up almost 6 per cent this year in comparison with peer currencies, was on course for a monthly fall in May. The US dollar index, which measures the greenback against a basket of six currencies, was down 0.2 per cent on Monday.