European stocks edged higher on Thursday after markets kicked off the new month on a downcast note, as fresh economic data intensified questions about interest rate rises and the global growth outlook.
The regional Stoxx Europe 600 share gauge rose 0.4 per cent in early dealings, having dropped 1 per cent in the previous session. Germany’s Dax also added 0.4 per cent. UK markets were closed for a public holiday.
Those moves came as Hong Kong’s Hang Seng lost 1 per cent and China’s mainland CSI 300 traded flat, with investors balancing both the easing of coronavirus restrictions in Shanghai and concerns about business health in the region. Figures released a day earlier had shown that China’s manufacturing activity contracted for the third month in a row.
Meanwhile, JPMorgan Chase chief executive Jamie Dimon said on Wednesday that investors should brace themselves for an economic “hurricane”, warning that the war in Ukraine would continue to pressure commodity markets.
Dimon also cautioned about further market volatility as the Federal Reserve begins reducing the size of its balance sheet by allowing bonds it holds to mature without purchasing new ones to replace them.
Futures contracts tracking Wall Street’s S&P 500 added 0.2 per cent in early European trading, after the broad gauge closed the previous session down 0.7 per cent.
Government bond markets were also steadier on Thursday after being hit by a fresh bout of selling a day earlier. That pressure had followed stronger than expected results from a closely watched survey of the US manufacturing sector, signalling that the Fed may have more room to raise borrowing costs without triggering a recession.
The yield on the benchmark 10-year US Treasury note was flat at 2.94 per cent. Germany’s equivalent Bund yield added 0.02 percentage points to 1.19 per cent. Bond yields rise as their prices fall.
Meanwhile, Brent crude fell 1.6 per cent to $114 a barrel, having topped the $120 threshold earlier in the week as surging fuel prices compounded supply fears. The drop on Thursday followed news that Saudi Arabia had indicated to western allies it was prepared to lift oil production, should Russia’s output slide substantially due to sanctions.
“We expect Brent crude prices to remain elevated over our forecast horizon,” wrote Mark Haefele, chief investment officer at UBS Global Wealth Management. “We forecast Brent crude to trade at $115 a barrel through June 2023, higher than the levels currently indicated in futures markets.”
In currencies, the dollar index — which measures the greenback against a basket of six others — slipped 0.2 per cent, with the euro rising 0.3 per cent to just under $1.07.
