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Stocks Rise On China's Technology, While Oil Prices Rise Due To Tensions In Ukraine

 = The Hong Kong tech index rises, as WTI crude rises to $88 per barrel.

= Markets take a break from the doom and gloom of imminent Fed rate rises.

Stocks surged on Monday, helped by a rebound in Chinese technology shares, while U.S. equity futures jumped as concerns about the Federal Reserve's monetary policy tightening eased.

Asia-Pacific stocks surged for a second day, boosted by a rebound in a Hong Kong tech index on speculation that the worst of Beijing's anti-tech crackdown has passed. For the Lunar New Year vacation, a number of markets, including those on mainland China, are closed. The S& P 500, Nasdaq 100, and European contracts all rose.

The dollar, the yen, and Treasuries all fell in value. This indicated a more positive investor mindset than last week when market volatility was fueled by fears of Fed stimulus tapering. Crude oil prices rose, owing to concerns that a Russian invasion of Ukraine could disrupt energy flows. The price of gold continued to fall.

After losing almost 6% in January, strategists have begun to argue that global markets are due for a more stable era, even if only temporarily. In the futures market, some speculative S& P 500 bets are the most optimistic since 2018.

In a note, BCA Research Inc. analysts Peter Berezin and Melanie Kermadjian said that the equity selloff "marks a long overdue correction rather than the commencement of a bear market." "When bond yields rise unexpectedly, stocks sometimes experience indigestion," they said, adding that stocks "generally bounce back as long as yields do not travel into economically restrictive area."

Market sentiment will be shaped in the coming days by monetary policy decisions from the European Central Bank and the Bank of England, as well as profit announcements from companies like Alphabet Inc. and Meta Platforms Inc. The Chinese economy slowed at the start of the year as manufacturing and services both slowed.

Hiking Trail

This month's market volatility has been fueled by the Fed's aggressive tilt to combat inflation, as well as an inconsistent earnings season for companies.

According to the Financial Times, a 50 basis-point rate hike or hikes at each policy meeting this year are alternatives to combat inflation, according to Fed Atlanta branch president Raphael Bostic. However, he believes that three quarter-point moves beginning in March will be the most likely conclusion in 2022. This year, Bostic does not vote on policy.


 

Economists at Goldman Sachs Group Inc. now expect the Fed to raise its near-zero interest rate five times this year, rather than four times. By the end of the year, it would be at 1.25 per cent -1.5 per cent.

Bitcoin, the world's most popular cryptocurrency, has dropped to roughly $37,000, a 20 per cent loss since the start of 2022.

Various speculative bubbles are deflating without having a significant influence on financial market functioning or the economy, according to Ed Yardeni, president of Yardeni Research. "The possibilities of a recession and a bear market in the S&P 500 are reduced," he said.

What to watch this week:

=  Earnings are due from Alphabet, Amazon, Exxon Mobil, Ford Motor, Meta Platforms, Qualcomm, Sony, Spotify, UBS Group

=  Eurozone GDP growth data, Monday

=  San Francisco Fed President Mary Daly due to speak at the event, Monday

=  Reserve Bank of Australia rate decision, Tuesday

= Manufacturing PMIs, including the eurozone, Tuesday

= OPEC+ meeting on output, Wednesday

= Eurozone CPI, Wednesday

= Bank of England, European Central Bank rate decisions, Thursday

= Fed Board of Governor's confirmation hearing, Thursday

= U.S. factory orders, initial jobless claims, durable goods, Thursday

= U.S. payrolls report for January, Friday

= Winter Olympics kick off in China, Russia’s President Vladimir Putin is due to attend the opening ceremony, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.3% as of 1:28 p.m. in Tokyo. The S&P 500 rose 2.4%
  • Nasdaq 100 futures rose 0.4%. The Nasdaq 100 rose 3.2%
  • Japan’s Topix index rose 1.2%
  • Australia’s S&P/ASX 200 index was steady
  • Hong Kong’s Hang Seng index climbed 1%
  • Euro Stoxx 50 futures rose 1.2%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%
  • The euro was at $1.1162
  • The Japanese yen was at 115.49 per dollar, down 0.2%
  • The offshore yuan was at 6.3751 per dollar

Bonds

  • The yield on 10-year Treasuries rose two basis points to 1.79%
  • Australia’s 10-year bond yield fell two basis points to 1.92%

Commodities

  • West Texas Intermediate crude rose 1.3% to $87.93 a barrel
  • Gold was at $1,786.37 an ounce, down 0.3% ( Source )
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