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US Futures Rise on Hopes for Less Aggressive Fed

  • Global stocks climbed steadily Monday as investors shifted from inflation to recession as the driver for the Fed. 
  • Fed chair Jerome Powell said last week that monetary tightening may be less sharp than expected to avoid a recession.
  • Russia has slipped into default on its foreign debt for the first time in over a century, according to reports.

Global stocks rose Monday as investors bought into the idea that the


Federal Reserve

will ease up on its aggressive plan for interest-rate hikes, if necessary to avoid a


recession

.

Meanwhile, Russia pushed back against reports it has slipped into default on its foreign debt after failing to make payments as a 30-day grace period expired.

US stocks looked set to press on with last week’s gains, which came after Jerome Powell said the US central bank would try its best to avoid a recession, but it would be difficult, as it attempts to curb soaring inflation.

“The positive story seems to be that Fed Chair Powell’s admission last week of the risk of recession means that global monetary tightening may not be as sharp as expected,” Chris Turner, global head of markets at ING, said in a note. “That’s good news for equities.”

Tech stocks continued to lead the rally Monday, with Nasdaq 100 futures up 0.55% after closing Friday with a weekly gain of over 7%. Futures on the S&P 500 and Dow Jones Industrial Average were 0.43% and 0.30% higher respectively.

Powell’s comments have helped to stabilize markets, analysts said. The Fed raised interest rates by 75 basis points — its largest hike since 1994 — at its last meeting, and investors have fretted that high inflation might usher in similarly aggressive increases.

“Gloomy growth indicators and falling oil prices caused markets to lower their expectations of aggressive increases by the Fed, which provided support for particularly high-valued technology stocks,” SEB’s Filip Carlsson said.

Oil prices were swaying between small gains and losses, after declining last week, as investors monitored the G7 meeting in Germany Monday, where leaders are debating a price cap on Russian oil. The global benchmark Brent crude was up 0.35% to $109.48 a barrel, while WTI crude climbed 0.18% to $107.81 a barrel.

Russia is in apparent default on its foreign debt for the first time since 1917, reports said, after it failed to pay $100 million in interest on two foreign-currency bonds on Sunday. Moscow called the situation a “farce” because sanctions are hampering creditors’ ability to be paid. The ruble was up 0.55% to 1.88 cents after the news.

In stock markets elsewhere, the MSCI World Index climbed 0.52%, thanks to strong sessions in Europe and Asia.

The pan-European STOXX 600 rose 0.76% as Frankfurt’s DAX 40 climbed 0.96%. Paris’s CAC 40 added 0.32%, while London’s FTSE 100 was up 0.68%.

In Asia, Tokyo’s Nikkei 225 closed 1.43% higher. Hong Kong’s Hang Seng climbed 2.35%, and the Shanghai Composite added 0.88%.

Here’s how other major asset classes are performing:

  • Gold prices rose after the G7 nations announced a plan to ban Russian imports of the precious metal. The safe haven asset rallied 0.54% to reach $1,840 an ounce.
  • The dollar continued to slip, with the US dollar index — which tracks the strength of the greenback against six other currencies — 0.22% lower at 103.97. 
  • Cryptocurrencies gained slightly, with bitcoin up 0.19% to $21,450, and ethereum down 0.58% to $1,232.



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