Global Shares Rise Despite Economic Growth, Rate Worries
TOKYO—Global markets rose moderately Monday, although worries continued about economic growth and inflationary pressures.
France’s CAC 40 rose less than 0.1 percent in early trading to 7,522.58. Germany’s DAX gained 0.2 percent to 15,830.74. Britain’s FTSE 100 added 0.5 percent to 7,911.91. U.S. shares were set to drift higher with Dow futures up less than 0.1 percent at 34,059.00. S&P 500 futures rose 0.1 percent to 4,168.75.
Traders are focused on companies’ upcoming earnings reports and worry about how inflation might affect moves by the Federal Reserve and the world’s other central banks on interest rates.
“Earnings expectations for this quarter are not brilliant,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “But the good news is, the expectations are driven by conversations with corporate executives which love sounding pessimistic, so that when the results come in better than expected, the market reaction could be positive despite soft results.”
Japan’s benchmark Nikkei 225 inched up nearly 0.1 percent to finish at 28,514.78. Australia’s S&P/ASX 200 edged up 0.3 percent to 7,381.50, while South Korea’s Kospi rose 0.2 percent to 2,575.91. Hong Kong’s Hang Seng added 1.7 percent to 20,782.45. The Shanghai Composite gained 1.4 percent to 3,385.61.
“Markets suffer from more heat than light as hyper-sensitivity of Fed policy projections to U.S. data continues to infuse out-sized volatility,” said Tan Boon Heng at Mizuho Bank.
China’s central bank kept the one-year medium-term lending facility rate unchanged at 2.75 percent, suggesting economic growth data to be released Tuesday won’t be too alarming.
High interest rates stifle inflation by slowing the economy, raising the risk of a recession and dragging on prices for investments.
Last week, a top Fed official said inflation remains far too high and more tightening may be needed. Christopher Waller, a member of the Fed’s governing board, also said that even after hikes to rates end, they will likely need to stay high for longer than markets expect.
After his comments, traders built bets that the Fed will raise rates at its next meeting in May, instead of taking its first pause in more than a year.
A report on Friday also showed U.S. shoppers cut their spending at retailers more than expected. Much of that was due to falling gasoline prices.
In energy trading, benchmark U.S. crude fell 43 cents to $82.09 a barrel. Brent crude, the international standard, declined 43 cents to $85.88 a barrel.
In currency trading, the U.S. dollar inched up to 133.91 Japanese yen from 133.75 yen. The euro cost $1.0978, down from $1.0997.
