Global stocks pushed higher on Tuesday, while the dollar declined, as traders moved back into riskier assets after the worst streak of weekly losses for equities since 2008.

The regional Stoxx Europe 600 index added 1.4 per cent after closing the previous session flat. Earlier, Hong Kong’s Hang Seng had climbed 3.3 per cent, with the tech-focused sub-index rising 5.8 per cent as the heads of large Chinese technology companies met regulators to discuss the country’s digital economy.

Analysts at JPMorgan suggested that equity markets had priced in too much recession risk, saying stocks “stand to recover if a recession doesn’t come through, given already substantial multiple derating, reduced positioning and downbeat sentiment.” The US bank is “sceptical” that April’s equity fund outflow — the highest since March 2020 — was the start of a long phase of outflows.

Futures trading pointed to a significantly higher New York open, with contracts tracking Wall Street’s S&P 500 adding 1.7 per cent and those following the tech-heavy Nasdaq 100 gaining 2 per cent, after a 1.2 per cent drop for the wider Nasdaq Composite index on Monday.

The FTSE All World index, which concluded six consecutive weeks of declines last Friday, rose 0.7 per cent on Tuesday.

Meanwhile, the dollar index, a measure of the US currency against six others, slipped 0.6 per cent lower in a third day of declines, having hit multiyear highs last month. Sterling rallied 1.3 per cent against the dollar and the euro rose 0.8 per cent to $1.05.

The euro added to its gains following comments from Dutch central bank chief Klaas Knot, cited by newswires, suggesting that the European Central Bank should raise interest rates by 0.25 percentage points in July, but should also remain open to a larger increase this year if inflation worsens. Markets are now pricing in a full percentage point of rate increases by the end of 2022, up from 0.93 percentage points on Monday.

As stock markets rose on Tuesday, eurozone debt was hit by a renewed wave of selling, sending yields higher. The yield on the 10-year German Bund, seen as a proxy for borrowing costs across the bloc, rose 0.08 percentage points to 1.01 per cent.

US debt also came under pressure, with the yield on the 10-year Treasury note adding 0.04 percentage points to 2.92 per cent and the policy-sensitive two-year yield rising 0.06 percentage points to 2.63 per cent.

The Federal Reserve raised interest rates by 0.5 percentage points this month, with similar-sized increases expected at the central bank’s next three meetings as it moves aggressively to curb stubbornly high inflation.

The withdrawal of Fed stimulus has damped the appeal of US sovereign bonds, while anticipation of higher borrowing costs has hit speculative, high-growth stocks whose valuations had been flattered by ultra-low interest rates during the coronavirus pandemic.

In commodities, Brent crude rose 0.9 per cent to slightly more than $115 a barrel. The international oil benchmark is almost 5 per cent higher for the month and nearly 50 per cent higher for the year as traders weigh the prospect of a global economic slowdown hitting demand, with concerns over supplies after Russia’s invasion of Ukraine.

Additional reporting by Ian Johnston



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