Stocks in Europe gained through some volatility on Monday as Investors measured whether bad news from last week on inflation and slowing growth, was finally priced in.
After the Stoxx Europe 500’s worst week since March, Banks led an advance this week. A slump in raw material prices led basic resources to underperform. After delaying listing its EV charging business due to volatile trading, ABB Ltd. dropped. And after France’s Macron lost his majority in Parliament, France’s equity benchmark lagged as well.
S&P 500 and Nasdaq 100 futures were up roughly 0.8% each. A dollar gauge dropped slightly. Treasury futures were mixed.
Volatility measures continue to be elevated as bad news keeps coming, alternating with investors thinking they have found a bottom, all punctuated by the continual fear monetary tightening will trigger a recession. Expert analysts keep giving conflicting advice, exacerbating the uncertainty. JP Morgan says stock pressures will let up in the second quarter due to inflation moderating, yet Morgan Stanley is cautioning more losses are coming, before things will improve.
Jean-François Paren, global head of market research at Credit Agricole CIB said, “Both prolonged inflation and/or a sharp increase in rates from central banks will have a deep impact on growth perspectives. If anything, current valuations are more the ‘exit point’ than the ‘entry point’.”
Commodities dropped on fears of an economic slowdown. Crude held on to the 7% of losses it took Friday, as Iron ore erased all of the year’s gains, and copper continued an eighth session of losses as base metals had the worst week in a year.
Bitcoin meanwhile hovered right around the pivotal $20,000 mark as institutional investors tried to figure out if it had reached a bottom.
MSCI Inc’s Asian index continued its longest downward stretch since February of 2020 as it sunk for an eighth straight day. China was an exception to the wider trend, continuing a sustained rise in part due to Beijing’s promise of economic support, and partly due to continued ramping up after being locked down for so long.
