European stocks traded cautiously on Monday after economic data sparked investors’ hopes that the US economy would weather the rise in interest rates, easing concerns over a possible recession.
Trade in Europe was choppy, with the region-wide Stoxx 600 oscillating between minor gains and losses in early morning trade, while Germany’s Dax advanced 0.2 per cent.
The gains came after a rally on Wall Street on Friday that saw the S&P 500 rise 1.5 per cent and the Nasdaq Composite climb 1.1 per cent after US jobs data showed new hires increased more than expected in May.
The headline figure boosted investor morale as it signalled resilience in the US economy, yet also made it more likely that the Federal Reserve would continue to increase interest rates in an effort to bring down inflation.
Markets are forecasting a 31 per cent chance of an interest rate increase in June, up from 25 per cent last Thursday, according to Refinitiv data.
In Europe, investors awaited a speech by European Central Bank president Christine Lagarde, who is set to present her views on the eurozone’s path for monetary policy in Brussels later on Monday.
Futures markets expect US stocks to edge down at the open later in the day, with contracts tracking the benchmark S&P 500 shedding 0.1 per cent, while those tracking the tech-heavy Nasdaq 100 fell 0.3 per cent.
In commodities markets, crude briefly jumped after Saudi Arabia said it would cut oil production by 1mn barrels a day in a bid to prop up prices. The kingdom’s energy minister said the cuts would initially be for July but could be extended.
Brent crude, the international benchmark, rose as much as 3.6 per cent before paring gains to be up 1.3 per cent at $77.14 a barrel. West Texas Intermediate, the US marker, rose as much as 4.6 per cent before pulling back to be up 1.42 per cent at $72.76.
Asia’s markets were broadly up, with Japan’s benchmark Topix stock index rising 1.7 per cent, while Australia’s S&P/ASX 200 added 1 per cent, South Korea’s Kospi gained 0.5 per cent and Hong Kong’s Hang Seng index advanced 0.7 per cent.
Chinese equities bucked the upward trend, with the CSI 300 index of Shanghai- and Shenzhen-listed stocks down 0.5 per cent after closing 1.4 per cent higher on Friday.
The losses for China stocks came despite a positive economic reading from the Caixin services purchasing managers’ index, which signalled sharper growth for the country’s service sector in May.
Official media in China also called on investors to have faith in the country’s domestic stock market, with the state-run Economic Daily suggesting that “clear-headed understanding, staunch confidence, resoluteness and patience” were the “chief responsibilities of all market participants”.