European, Asian stocks rise as traders eye US inflation

Asian and European stock markets rose Monday in holiday-thinned trading, with investors awaiting fresh US and European inflation data for more clarity on the outlook for interest rates.

Sentiment took a blow last week after Federal Reserve officials warned they wanted more evidence that prices were being brought under control, fuelling worries they might not cut interest rates this year.

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That was compounded by figures suggesting the world’s number one economy remained strong, despite borrowing costs being kept at two-decade highs.

But Wall Street’s broad-based S&P 500 index and the tech-heavy Nasdaq both benefited Friday from figures showing one-year expectations for prices edged down slightly, while consumer sentiment picked up.

The positivity followed through to Asia on Monday, which was also boosted by news that profits at China’s industrial companies rose in April, having dropped the month before.

Hong Kong, Tokyo, Shanghai, Sydney, Seoul, Mumbai, Singapore, Bangkok and Taipei all rose, though there were some losses in Jakarta, Manila and Wellington.

Paris, Frankfurt and Milan advanced at midday despite a survey showing German business sentiment stagnated in May after months of improvement, denting hopes that Europe’s biggest economy is on course for a strong recovery.

London was closed for a holiday. Wall Street is also closed on Monday.

“Markets continue to consolidate while global investors remain discerning on signs of US economic health and Fed’s plausible monetary path,” said Edward Ng, of Nikko Asset Management.

Focus is now turning to the release of the US personal consumption expenditures (PCE) index, which is the Fed’s preferred gauge of inflation.

“Investors will look to US PCE print this Friday as a potential signpost for further market directions,” Ng added.

The reading comes after the consumer price index edged down in April, having come in above forecasts for each of the previous three months.

Also coming up is the Fed’s Beige Book on the state of the economy, which will be pored over for an idea about the bank’s thinking on monetary policy.

“While last week began on optimism that inflation could allow the Fed to cut rates as early as in September, this week begins on pessimism that the latter will probably not be possible,’ said Ipek Ozkardeskaya, senior analyst at Swissquote bank.

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While the Fed holds on rate cuts, eurozone inflation data for May will be released on Friday and a further cooling would reaffirm expectations that the European Central Bank will cut rates in June.

Elsewhere, oil prices extended last week’s gains of more than one percent ahead of a key June 2 meeting of OPEC and other major producers, with expectations high that they will maintain output cuts.

“Based on current market expectations that OPEC+ is likely to extend cuts, oil’s risks are skewed to the upside,” said Qisheng Futures analyst Gao Jian.

In company news, the stock price of the electric vehicle arm of China’s struggling property giant Evergrande more than doubled after it emerged liquidators were in talks with potential buyers.

Evergrande New Energy Vehicle piled on 113 percent in Hong Kong, representing the biggest intra-day jump in nearly 10 years, according to Bloomberg News.

– Key figures around 1020 GMT –

Paris – CAC 40: UP 0.1 percent at 8,105.26 points

Frankfurt – DAX: UP 0.1 percent at 18,708.03

EURO STOXX 50: UP 0.1 percent 5,039.51

Tokyo – Nikkei 225: UP 0.7 percent at 38,900.02 (close)

Hong Kong – Hang Seng Index: UP 1.2 percent at 18,827.35 (close)

Shanghai – Composite: UP 1.1 percent at 3,124.04 (close)

New York – Dow: Closed for a holiday

London – FTSE 100: Closed for a holiday

Dollar/yen: DOWN at 156.87 from 156.93 yen on Friday

Euro/dollar: UP at $1.0855 from $1.0851

Pound/dollar: UP at $1.2749 from $1.2735

Euro/pound: DOWN at 85.14 from 85.17 pence

West Texas Intermediate: UP 0.6 percent at $78.17 per barrel

Brent North Sea Crude: UP 0.6 percent at $82.57 per barrel

© Agence France-Presse