(Bloomberg) – Stocks rose after President Joe Biden announced he would reconsider Chinese tariffs imposed by the Trump administration. The dollar and bonds fell.
Big banks led the S&P 500 gains after JPMorgan Chase & Co. chief Jamie Dimon said “thunderclouds” over the U.S. economy could dissipate. The euro rose after European Central Bank chief Christine Lagarde said higher interest rates were ahead in July.
“Markets have been waiting for a rally for some time,” wrote Paul Nolte, portfolio manager at Kingsview Investment Management. “This will likely not mean an end to the decline that began at the start of the year, but a respite from the persistent selling of the past two months.”
Read: Gartman advises selling rallies in this year’s ‘bear market’
Separately, Biden said the U.S. military would step in to defend Taiwan in any attack from China, comments that appeared to break with the longstanding policy of “strategic ambiguity” before being pushed back by state officials. White House. Meanwhile, his administration announced that a dozen Indo-Pacific countries would join the United States in a sweeping economic initiative aimed at countering China’s influence in the region.
Russia’s blockade of Ukrainian ports is a ‘declaration of war’ that threatens to trigger mass migration and a global food crisis, a UN official says, adding to dire warnings from the opening day of the World Economic Forum in Davos . A diplomat from the Russian UN mission in Geneva has resigned in protest against President Vladimir Putin’s invasion of Ukraine, becoming the first envoy to publicly criticize the war.
Stocks have been volatile as investors weigh the impact of China’s Covid policies and monetary tightening on the outlook for the world’s largest economies. Beijing reported a record number of cases, reigniting concerns over a lockdown, and adopted multiple measures to further stabilize the economy.
The minutes of the Federal Reserve’s latest rate-setting meeting will give markets a glimpse this week of the US central bank’s tightening trajectory. St. Louis Fed President James Bullard said the central bank should accelerate a series of aggressive rate hikes to push rates to 3.5% by the end of the year, which in the event successful, would lower inflation and could lead to easing in 2023 or 2024.
“The macro backdrop remains challenging, but a lot of bad news has been absorbed. We are likely approaching a near-term bottom for risk assets,” Barclays Plc strategist Ajay Rajadhyaksha wrote in a note.
Here are some key events to watch this week:
- S&P World Eurozone PMI Tuesday
- US New Home Sales, S&P Global PMI Tuesday
- Reserve Bank of New Zealand rate decision on Wednesday
- Wednesday FOMC Minutes
- The ECB publishes its Financial Stability Review on Wednesday
- Bank of Korea rate decision on Thursday
- US GDP, first jobless claims Thursday
- US Core PCE Price Index; personal income and expenses; wholesale inventory; University of Michigan Consumer Sentiment Friday
Some of the major movements in the markets:
- The S&P 500 rose 1.9% at 12:14 p.m. PT
- The Nasdaq 100 rose 1.6%
- The Dow Jones Industrial Average rose 2.1%
- The MSCI World index rose by 1.5%
- The Bloomberg Dollar Spot Index fell 0.6%
- The euro rose 1% to $1.0670
- The British pound rose 0.8% to $1.2575
- The Japanese yen was little changed at 127.82 per dollar
- The yield on 10-year Treasury bills rose eight basis points to 2.86%
- Germany’s 10-year yield rose seven basis points to 1.02%
- The UK 10-year yield rose eight basis points to 1.97%
- West Texas Intermediate crude rose 0.2% to $110.52 a barrel
- Gold futures rose 0.4% to $1,855.10 an ounce
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