European stock futures higher, as un prepares to discuss Ukraine situation
US equities finished higher last week with Dow Jones jumping 1.7%, the S&P 500 increasing 2.4% and the Nasdaq rallying 3.1%. The gains came as sentiment remained unstable amid concerns about implications of a more aggressive Fed tightening campaign. Economic calendar showed Q4 employment costs moderated from Q3 record high pace. Personal Income rose 0.3% month-over-month in December below forecast. The PCE Deflator increased 0.4% m/m in line with expectations, PCE Core Price Index rose 0.5% m/m also matching the expectations. The Q4 Employment cost Index increased 1% q/q below estimates calling for a 1.2% rise. The January final University of Michigan Consumer Sentiment Index was unexpectedly revised lower to 67.2. Treasuries were higher with the 10-year yield decreasing 3 bps to 1.78%, while the 30-year bond rate was 1 bp lower at 2.08.%. The US Dollar traded lower on Monday stepping back from 1 and a half high tested in the previous session, as hawkish comments over the weekend by a Fed official sent US curve to its flattest levels in three months. DXY is down 0.2% at around 97.07.
European stock markets opened higher this Monday with FTSE 100 gaining 0.29% to 7,488, CAC 40 rising 0.92% to 7,030 and DAX trading 1.5% higher at 15,541. The positive tone is driving the markets as UN security council prepares to discuss Russia’s troop build-up on the border with Ukraine. Western countries are currently preparing sanctions against Russia should it try to invade Ukraine. Such a move could have severe repercussions for Europe’s energy supplies. In corporate news, Ryanair will be in focus on Monday after reporting a loss of 96 mln euros for the last quarter of 2021. The economic data centres around the release of preliminary fourth-quarter GDP for Eurozone, which is expected to rise 0.3% q/q and 4.7% y/y. BoE is expected to raise interest rates on Thursday by 50 bps. EURUSD advanced above 1.1150 amid US dollar pullback.
Asian shares swung higher on Monday with Japan’s Nikkei bouncing 1.3% from a 14-month trough, and Hang Seng gaining 1%. Data on Sunday showed China’s factory activity slowed in January as a resurgence of COVID-19 cases and tough lockdowns hit production and demand. Lunar New Year holiday made for thin conditions and MSCI’s broadest index of Asia-Pacific shares outside Japan nudged up 0.6% in slow trade.
Oil rose more than 1% on Monday to the near 7-year highs hit last week with Brent rising 1.4% to $91.31 a barrel and WTI adding 1.3% to $87.96 a barrel. Supply concerns and political tension in Eastern Europe and the Middle East put prices on track for their biggest monthly gain in almost a year. With an expectation that OPEC+ will keep the existing policy of gradual increase of production, oil prices will likely stay on a bullish sentiment this week.