LONDON, Jan 31 (Reuters) – Stocks rebounded modestly on Monday as traders put aside worries about inflation and the Ukraine crisis to dive back, but global equities are still heading for their worst month of January since 2016 after a deadly month for the most risky. assets.

The rise in European and Asian stocks follows a late surge on Wall Street on Friday when a string of earnings beating forecasts from companies, including tech giant Apple, helped stabilize investor sentiment after a series of volatile sessions.

Still, investors say the backdrop for equities remains uncertain as central banks hike interest rates – the Bank of England is expected to hike further on Thursday – and a further rise in oil prices adds to inflation concerns. Read more

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As of 08:45, the Euro STOXX (.STOXX) gained 1.01%, the German DAX (.GDAXI) 1.28% and the British FTSE 100 (.FTSE) 0.28%.

The Lunar New Year holiday created tough conditions and MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) gained 0.73% in slow trading.

S&P 500 futures indicated a flat open while Nasdaq futures were higher.

The MSCI World Index (.MIWD00000PUS), although up on Monday, remains down more than 6% in January – the worst start to a year since 2016.

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“This is not the classic selloff affecting underperforming, lower quality companies. This selloff is not driven by fundamentals but by central bank action at a time of very strong growth. “said Flavio Carpenzano, Chief Investment Officer, Capital One Group.

“For years you were like a spoiled child, you could get all the money you wanted and for free and you could buy whatever you wanted, you didn’t care so much about quality. Now that’s the Conversely, you have to be more disciplined, so you have to look carefully at the assessment.”

Data released on Sunday showed Chinese factory activity slowed in January as a resurgence in COVID-19 cases and severe lockdowns hit output and demand. Read more

The standoff over Ukraine also remains a thorn in the side of markets, which fear a Russian invasion could also cut off vital gas supplies to Western Europe. Moscow denies any invasion plan. Read more

Oil prices hit new seven-year highs on Friday, after climbing for six straight weeks as political tension heightened worries about limited energy supplies.

Brent rose 0.68% to $90.64 a barrel, not far from Friday’s high of $91.7, while U.S. crude climbed 0.89% to $87.06.


Yields on government bonds remained stable as the rebound in equities limited demand for safe havens. Yields have jumped this year in anticipation of a faster pace of rate hikes in 2022, but the rally in longer-term yields stalled last week.

Markets have swung to price in five Federal Reserve hikes this year to 1.25%, though investors still see rates peaking at an all-time low of 1.75% to 2.0%.

BofA analysts think that’s not hawkish enough.

“We emphasize that markets underestimated Fed hikes at the start of the last two hike cycles and we believe this will be the case again,” said BofA chief economist Ethan Harris. BofA now expects a 25 basis point hike at each meeting for a total of seven hikes and four more in 2023.

Like the Bank of England, the European Central Bank is meeting this week but is expected to stick to its argument that inflation will recede over time. Read more

Big data releases this week include ISM readings on manufacturing and services, and the January jobs report.

The payroll number is expected to be low given the upsurge in coronavirus cases and inclement weather. The median forecast is for a rise of just 155,000, while forecasts range from a gain of 385,000 to a decline of 250,000.

More hawkish noise from Fed Chairman Jerome Powell supported the US dollar, which has surged 1.6% so far this month against a basket of its main rivals, hitting the highest since July 2020 He was last at 97.042.

The euro lost 1.7% last week, falling to its weakest level since June 2020. On Monday, it rose 0.2% to $1.1173. The dollar even gained on the safe haven yen, up 1.3% last week, and another 0.2% on Monday to 115.44 yen.

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Additional reporting by Wayne Cole in Sydney and Sujata Rao in London; Editing by Alison Williams

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