European and Asian stocks rose on Monday, while US futures fell, even as cooler than expected inflation data for the world’s biggest economy released last week boosted investors’ hopes that the Federal Reserve could soon slow the pace of monetary tightening.
The regional Stoxx Europe 600 index opened 0.3 per cent higher, consolidating a more than 3 per cent rise last week. London’s FTSE gained 0.4 per cent.
Contracts tracking Wall Street’s benchmark S&P 500 fell 0.2 per cent and those tracking the tech-heavy Nasdaq 100 slipped 0.4 per cent. The main S&P index added 6.4 per cent on Thursday and Friday, with the Nasdaq Composite rising by 9.3 per cent over the same period, marking its biggest two-day gain since 2008.
In government bond markets, the yield on two-year US Treasuries rose 0.06 percentage points to 4.38 per cent, while the yield on the benchmark 10-year Treasury note added 0.04 percentage points to 3.87 per cent. Yields rise when prices fall.
The dollar index, which tracks the currency against six others, added 0.3 per cent, recovering some of its losses last week.
The moves come after annual US consumer price growth slowed to 7.7 per cent in October, less than the 8 per cent expected by economists. The reading eases pressure on the Fed to increase its main policy rate by 0.75 percentage points when it next meets in December, having implemented four such rises in a row in an aggressive campaign to tame historically high rates of inflation.
Mary Daly, president of the San Francisco branch of the Fed, suggested over the weekend that the central bank was considering a slower pace of rate rises.
“You have to be mindful of the cumulative tightening that’s already in the system. You have to be mindful of the lags in monetary policy,” Daly told the Financial Times. “You have to be mindful of the risks that are all throughout the global economy and the tremendous uncertainty that we have, even about what the evolution of inflation is going to be.”
Still, Fed governor Chris Waller told a UBS conference in Australia on Monday morning that rates were going to “keep going up” and “stay high for a while until we see this inflation get down closer to our target”.
Asian equities also kicked off the week on a positive note following a softening of Beijing’s zero-Covid policy, as well as reports of new policy support for the indebted property sector.
Hong Kong’s Hang Seng index was up about 1.7 per cent after earlier rising as much as 3.9 per cent, while China’s CSI 300 added as much as 0.1 per cent. Japan’s Topix lost 1 per cent and South Korea’s Kospi fell 0.3 per cent.
Real estate stocks rallied particularly strongly on Monday, with the Hang Seng Mainland Properties index adding as much as 13.7 per cent. Hong Kong-listed Country Garden, China’s biggest developer, meanwhile shot up 45 per cent.