Stock Markets Start Week With Solid Gains

New York: Global stocks struck a triumphant note on Monday, rising solidly ahead of an event-packed trading week.

The wave of higher results began in Asia, where Tokyo’s main stocks closed up more than one per cent, followed by solid gains in Europe and even stronger advances in New York.

The gains helped take another bite out of the big losses suffered at the start of February, when fears of US inflation sparked a global selloff.

Those worries were eased somewhat on Friday when the US Federal Reserve, in its semi-annual report to Congress, tempered speculation that it could hike benchmark interest rates four times this year and said inflation remained subdued globally.

However, analysts still warn equity valuations remain elevated and volatility could still return.

Tech stocks returned to pre-correction levels while Cisco and 3M both gained more than three per cent. This helped send the Dow Jones Industrial Average 1.6 per cent higher while the broader S&P 500 added 1.2 per cent.

London’s benchmark FTSE 100 index finished the day with a gain of 0.6 per cent. In the eurozone, Frankfurt’s DAX 30 rose 0.4 per cent and in Paris the CAC 40 was up 0.5 per cent.

Showtime for Powell

“The recovery in European equity markets is still being played out. Investors are becoming more content to buy back into the market, and the memory of the sharp sell-off at the start of the month is continuing to fade,” said market analyst David Madden at CMC Markets UK.

“Dealers are coming around to the idea that the positive market momentum is here to stay,” he added.

Monday’s positivity kicks off a busy week, with the release of key US data including figures on economic growth and inflation.

Also, new Fed boss Jerome Powell will speak before key congressional committees on Tuesday and Thursday in his debut appearance. 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 continued pushing higher 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.

Analysts said comments from Saudi Arabia that it would produce less than agreed output levels in the first three months of this year helped support prices.