Stocks squeeze slim gains, dollar climbs as inflation soars

  • The European STOXX 600 up 0.3%
  • Banks and auto stocks gain
  • Wall Street poised to reflect advances
  • The dollar climbs to its highest in two weeks against the yen

LONDON/SINGAPORE, June 1 (Reuters) – European stocks posted small gains on Wednesday as the dollar strengthened as investors worried about soaring inflation and the hit to global growth from the impending hikes interest rates.

The European STOXX 600 index (.STOXX) added 0.3%, with exchanges in London (.FTSE) and Paris (.FCHI) rising by 0.2% and 0.4% respectively.

Banks (.SX7P) and automatic (.SXAP) stocks gained, although data showed German retail sales fell more than expected in April as consumers felt the pinch of higher prices. Read more

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Soaring food and energy prices drove eurozone inflation to a record high of 8.1% in May, figures showed on Tuesday, stoking concerns over uncertain rate hikes. only in Europe but in the world. Read more

The Bank of Canada is the latest central bank to raise interest rates, with economists expecting a 1.0% to 1.5% increase later Wednesday. Read more

Market participants were watching whether attempts to stifle inflation by central banks around the world with tighter monetary policy would trigger recessions – which in turn could slow rate hikes.

“It’s just an incredibly uncertain environment at the moment,” said Mike Bell, global market strategist at JP Morgan Asset Management. “At times like this, it makes sense to moderate the size of your risk positions.”

Investors also feared, Bell said, whether a European Union agreement on an embargo on imports of Russian crude oil would lead to retaliation from Moscow. The ban aims to halt 90% of Russian crude imports into the 27-nation bloc by the end of the year. Read more

Wall Street was expected to echo the gains in Europe. S&P 500 futures rose 0.4% for the last time, gaining strength in London trade.

The MSCI Global Equity Index (.MIWD00000PUS)which tracks stocks in 50 countries, was stable.

Earlier, Shanghai flashed out of a two-month lockdown, but as data showed steep declines in factory activity across Asia due to faltering Chinese demand, relief in the region has been felt. of short time. Read more

MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) fell 0.4%, dragged down by Hong Kong’s Hang Seng index (.HSI).

Eurozone bond yields fell in early trade after surging on Tuesday after inflation data from the bloc turned much higher than expected.

As global inflation concerns erupted again, the US dollar hit a two-week high against the yen, supported by rising Treasury yields. The dollar halted a three-week slide and hit a two-week high at 129.23 yen.

The dollar index which measures the currency against six major peers, including Japan, rose 0.2% to 102.05, extending a 0.4% rally since Tuesday.

GYRATIONS

The US Federal Reserve begins Wednesday to reduce holdings accumulated during the pandemic. Traders expect him to raise rates by 50 basis points at meetings this month and next and they are uncertain and increasingly worried going forward.

St. Louis Federal Reserve Chairman James Bullard and New York Fed Chairman John Williams are also due to speak on Wednesday and will be watched for clues on the outlook.

“We’re now in this kind of twilight zone where it’s just very difficult to know what the Fed is going to do after the July meeting,” said Bank of Singapore analyst Moh Siong Sim.

“Depending on who’s saying what and how the data plays out, there’s going to be a lot of fluctuation over the next few weeks.”

In commodity markets, oil prices edged higher after the EU agreed to a partial, phased ban on Russian oil and the end of Shanghai’s COVID-19 lockdown.

Brent crude futures rose 0.3% to $115.95 a barrel.

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Reporting by Tom Wilson in London and Tom Westbrook in Singapore; Editing by Sam Holmes and Emelia Sithole-Matarise

Our standards: The Thomson Reuters Trust Principles.

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