U.S. stocks extend risk rally on China; dollar weakens - BNN Bloomberg

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Stocks extended global gains in risk assets, driven by China's reopening trade and expectations of slower rate hikes. The dollar weakened and oil rallied.

Europe's Stoxx 600 Index climbed, with mining and energy shares among those leading the advance amid optimism over China's demand for raw materials. Wall Street equity futures also pointed to further gains after the S&P 500 and Nasdaq 100 jumped in excess of two per cent on Friday. In New York premarket trading, Bed Bath & Beyond Inc. soared after losing almost half its value in the previous week on bankruptcy worries.

The U.S. December inflation report due Thursday will be front of mind for traders after last week's jobs data failed to offer a clear picture, with unemployment at its lowest level in decades, while wage gains were weak. Kansas City Federal Reserve's Esther George on Friday warned that officials will have a tough road ahead as they attempt to balance inflation and employment while others have previously emphasized rates will be higher, and held there for longer than earlier anticipated.

While pressure on the Fed to hike by 50 basis points on Feb. 1 has eased, “policy makers appear to be increasingly frustrated by market-pricing at odds with Fed signaling in terms of both the terminal funds rate and timing of initial rate cut,” BNP Paribas economists led by Carl Riccadonna wrote in a note to clients. “This could tilt their bias toward a more forceful response at the next meeting.”

 

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