News of the Federal Reserve’s (Fed) decision to slow interest rate hikes after June and July has spurred investors ’appetite heading for high -yielding assets amid a recovering market environment.
In addition, relief was also felt with the decision of the Shanghai authorities to lift the Covid-19 ban on businesses before 2 months of ‘confinement’.
It indirectly made the global stock market trade positive while the US dollar remained at a 5 -week low.
The global benchmark MSCI stock index hit a 4 -week high of 0.55%, with a monthly gain of 0.5%.
The pan-European STOXX 600 index hit 0.3% while Japan’s Nikkei added 2.2% and Chinese blue chips strengthened 0.7%.
According to Carlo Franchini, the head of clients at Banca Ifigest Milan, investors have digested all the prospects, including the clarity of the European Central Bank (ECB) in raising interest rates has restored some sentiment.
Wall Street closed yesterday in conjunction with Memorial Day but the United States (US) derivatives market remained open with the S&P 500 e-mini futures up 0.3% while the Nasdaq Composite e-mini added 0.7%.
Meanwhile, recovering sentiment has kept the US dollar weaker while the Euro strengthened with hawkish comments from the ECB in raising rates as early as June.
According to Goldman Sachs analyst Zach Pandl, with the focus glued to the ECB’s current monetary policy, with expectations for the start of this rate transition it will be in favor of the Euro.
As a result, the Euro climbed 0.35% to a 5 -week high of $ 1.0764 while the dollar fell to a new low of 101.35, after declining 1.3% last week.
On the other hand, the Fed’s dovish decision has made treasury yields bounce with the 10 -year yield note ending above a 6 -week low of 2.743%, after falling 3.203% on May 9th.
Gold capitalized on the weakness of the US dollar with a 0.4% jump at $ 1,860.5 an ounce.
