Stock markets kick off week with solid gains

27/02/2018 06:04 AST

Global stock markets rose solidly on Monday following healthy pre-weekend gains on Wall Street. The advances helped take another bite out of the big losses suffered at the start of February, which were sparked by concerns that rising US inflation could lead to faster-than-expected interest rate rises in the world’s biggest economy.

Those worries were eased somewhat Friday when the Federal Reserve, in its semi-annual report to Congress, said inflation remains subdued globally and it expects to raise borrowing costs three times this year - tempering speculation of four increases. However, analysts warn that equity valuations remain elevated and volatility could still return.

After Tokyo’s main stocks index closed up more than one per cent, Europe’s leading indices pushed higher albeit with lesser gains. Around 1430 GMT, London’s benchmark FTSE 100 index was up 0.8 per cent compared with Friday’s closing level.

In the eurozone, Frankfurt’s DAX 30 added 0.4 per cent and in Paris the CAC 40 rose 0.7 per cent. Wall Street opened higher on Monday, with the Dow climbing 0.4 per cent in the first minute of trading.

“The FTSE has opened the new week in positive territory, putting last week’s losses behind it,” said Fiona Cincotta, senior market analyst at City Index trading group.

“The stronger start comes after a broadly upbeat overnight session in Asia and following a strong finish to the previous week Wall Street.” All three main Wall Street indices powered higher Friday, with the Dow up 1.4 per cent, S&P 500 winning 1.6 per cent and Nasdaq jumping 1.8 per cent.

Monday’s positivity meanwhile kicks off a busy week, with the release of key US data including economic growth, jobs creation and wages.

Also, new Fed boss Jerome Powell will speak before a key finance committee. Markets will pore over his comments for clues about plans for monetary policy - though many predict he will stick to the path of his predecessor Janet Yellen.

In foreign exchange, the dollar wobbled after climbing Friday on the back of the Fed comments. Gains by the euro were being curbed by uncertainty ahead of weekend elections in Italy, one of the eurozone’s biggest economies.

Oil prices dipped following gains at the end of last week on a surprise drop in US stockpiles and as a key terminal in major producer Libya suffered disruption from protests.

Downward pressure has come from Saudi Arabia predicting that an output cap by OPEC and Russia could be eased next year, traders said.

Gains in technology shares and Warren Buffett’s Berkshire Hathaway drove gains on Wall Street on Monday, with investors also looking for more clues on interest rate hikes from new Federal Reserve chair Jerome Powell’s testimony this week.

The Gulf Today