European shares rise after sharp weekly losses in global equities

European shares rose on Monday after global stocks posted their biggest weekly losses since the pandemic-induced decline in March 2020.

The regional Stoxx 600 rose 0.7% in choppy trade as traders looked ahead to economic data and an appearance by Federal Reserve Chairman Jay Powell in Congress that could underscore the U.S. central bank’s resolve to fight inflation by raising interest rates.

Jefferies strategist Sean Darby warns investors not to expect European stock marketHowever, interest rates “will climb” as “growth slows”, a situation he described as a “perfect macro storm”. The Stoxx is down nearly 17% so far this year.

London’s FTSE 100 rose 1.3% on Monday, as shares of energy producers rose, rebounding from losses on economic growth concerns. Shares in Royal Dutch Shell, a key component of Britain’s blue-chip index, rose 3.7% after falling nearly 13% in the week to June 17.

The FTSE All-World index, which measures stocks in emerging and developed markets, fell last week by the most since March 2020, falling 5.7%. U.S. stocks also suffered their biggest weekly drop since the onset of the coronavirus pandemic.

This stock price falls The Bank of England and the Swiss National Bank followed the Federal Reserve last week in raising interest rates to combat soaring inflation, driven by an increasingly bleak outlook for global markets.

Investors also look forward to listing Company earnings It fell due to higher consumer and producer prices and weaker consumer spending. Wall Street’s S&P 500 closed last week nearly 25% below its January high.

“I think we’re in between two corrections in global equities,” said Francesco Sandrini, head of multi-asset strategy at Amundi.

“The top 20 percent of the stock market crash is because of valuations,” he said. lower net present value The company’s future profits in the investor model.

“We might see an extra 10 percent [drop] Relative to earnings, reflecting continued inflation and an increased risk of recession,” Sandrini added.

Thursday’s survey of global purchasing managers will provide insights into how companies around the world are coping with rising fuel prices and supply chain disruptions caused by Russia’s invasion of Ukraine and China’s coronavirus lockdown.

Powell will testify to Congress on Wednesday and Thursday after the world’s most powerful central bank raised its key interest rate by 0.75 percentage point last week — the first such hike since 1994.

On Saturday, Fed Governor Christopher Waller expressed support for another 0.75 percentage point increase in July. U.S. consumer price inflation rose to a 40-year high of 8.6% in May, with Waller commenting that the central bank was “all in on restoring price stability.”

EUR/USD rallied 0.2% to $1.05 on potential instability from French President Emmanuel Macron lose the majority in the French National Assembly. Brent crude, the oil benchmark, was flat at $113 a barrel.

Analysts at ING said the latest political developments in Paris “would significantly reduce the country’s ability to govern and could put structural reforms at risk”.

In Asia, Hong Kong’s Hang Seng rose 0.4% and Japan’s Nikkei 225 fell 0.7%.

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