Market commentary
Most global stocks extended gains from last week after steady oil prices eased inflation concerns on Monday, while an improvement in risk sentiment helped to support global indices. Investors are hoping that steady oil prices will further ease inflation angst and make the case for less aggressive monetary policy tightening by the US Federal Reserve (Fed). However, the prospect of tighter supplies loomed over the market as the G7 member states vowed to support Ukraine, proposing to cap the price of Russian oil as part of new sanctions to hit Moscow's war chest. Brent crude futures settled at $115.09 a barrel, while gold steadied below $1 830 an ounce following reports that the same G7 member countries also intend on barring new bullion imports from Russia.
Investor concern over tight Russian oil supply prompted by sanctions against Moscow weighed on Wall Street on Monday, with all three indices trading around the flatline at 20h00 local time. However, encouraging developments on the data front limited the losses. “New orders for US-made capital goods went up for the third consecutive month, indicating that business spending plans remain strong despite higher interest rates and inflation,” Reuters reported. Adding to the improved sentiment was an increase in the 10-year US Treasury yield from a two-week low of 3% to 3.20% ahead of the US Personal Consumption Expenditures (PCE) reading for May 2022 due later this week.
European equities were buoyant on Monday with the pan-European STOXX 600 advancing 1% driven by gains in the tech space. The FTSE 100 extended a 2.70% gain from the previous session, led by advances in commodity-linked stocks “after Covid-19 regulations eased in China and as the G7 pledged $600 billion worth of infrastructure spending in developing countries,” Reuters reported. The DAX 40 also enjoyed some respite, adding 0.50% to finish around 13 190 points.
The local bourse rose over 2% to close at a two-week high, tracking a jump in heavyweight Naspers and commodity stocks. “Shares of local internet giant Naspers soared over 22% after its subsidiary Prosus surprisingly sold more than 131.8 million shares in JD.com it got from Tencent Holdings, saying JD didn’t fit with its broader strategy,” Trading Economics reported.
Stocks in the Asia-Pacific region advanced “as investors continued to assess whether stocks have found a bottom or are undergoing a bear market rally,” Reuters reported. At the close of business, the Hang Seng finished 2.40% higher, while the Nikkei jumped 1.43% to close at 26 871.27 points.
