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Title: Stocks rise, dollar struggles on Fed bets

May 30, 2022 04:20AM ET

By: AnalysisWatch

Global stocks rose on Monday and the dollar was stuck near five-week lows on hopes of a possible slowdown in US monetary tightening after sharp interest rate hikes in June and July.

Also helping to calm the mood was news that Shanghai authorities will lift many of the restrictions on businesses resuming operations from Wednesday, easing a shutdown that began two months ago.

The benchmark pan-European STOXX 600 stock index gained 0.7%, while Japan's Nikkei added 2.2% and Chinese stocks rose 0.7%.

Although Wall Street will be closed for Memorial Day, U.S. futures were trading. The S&P 500 e-minis rose 0.9% after rising 6.6% last week in its best performance so far this year, while the Nasdaq e-minis added another 1.3%.

Investors took advantage of indications that the Federal Reserve, after hiking aggressively over the next two months, might then slow the tightening process.

The chance of a less hawkish Fed was enough for Treasuries to rally, with the yield on 10-year bonds just above a six-week low of 2.743%. That's down from a peak of 3.203% on May 9.

The more stable market mood has led to a fall in the safe-haven dollar and yen, while the euro has been boosted by hawkish comments from European Central Bank (ECB) officials, who signaled an interest rate hike as early as July.

This underscores the importance of this week's key US data, which includes Wednesday's ISM manufacturing survey and Friday's May payrolls report.

Solid payroll growth of 320,000 is expected, although this would be down from April with unemployment at 3.5%.

The dollar's pullback helped gold break out of recent lows, sending the metal up 0.5% to $1,862 an ounce.

The EU failed on Sunday to reach an agreement on an embargo on Russian oil, but diplomats will still try to make progress ahead of Monday-Tuesday's summit.

Brent rose 0.4% to $119.90 a barrel, while US crude gained 0.6% to $115.72 a barrel.

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