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Global Stocks Rebound as Markets Seem Less Worried About Inflation

Summary

At the beginning of the Asian market on Tuesday (May 24), the market was generally not volatile, and spot gold was still hovering above 1850. The U.S. dollar index continued its decline on Monday, hitting a new low of 102.03 in nearly four weeks at one point, continuing to provide gold prices with rebound momentum. However, the rebound in global stock markets and the rise in U.S. bond yields caused gold prices to give up some of their gains. U.S. crude oil prices were little changed on Monday as fears of a possible economic recession offset prospects for fuel demand due to the coming U.S. summer driving season and cooling coronavirus fears.

U.S. stocks ended higher on Monday, as a rally in bank stocks and a rebound in technology stocks drove broad gains, after Wall Street posted its longest weekly decline since the dot-com bubble burst more than 20 years ago. The three major U.S. stock indexes rose between 1.6% and 2.0%, with the biggest boost from the rebound of technology giants Apple and Microsoft. Shares of interest-rate-sensitive banks jumped 5.1 percent after JPMorgan, the largest U.S. bank, raised its forecast for interest income for the year. Shares of JPMorgan Chase rose 6.2%.


On Friday, the S&P 500 closed 18.7% below its Jan. 3 record high. A close 20% or more below the last high for the benchmark stock index would confirm that the index has been in a bear market since then. Markets have been volatile in recent weeks, with concerns over persistently high inflation and aggressive efforts by the Federal Reserve to rein in inflation as the global economy grapples with the fallout from Russia’s invasion of Ukraine. "Today, the market appears to be less concerned about inflation factors and whether the Fed will be able to push for a soft landing," said Chuck Carlson, chief executive of Horizon Investment Services. Still, he added, "risks remain skewed to the downside."


The Dow Jones Industrial Average rose 618.34 points, or 1.98%, to 31,880.24, the S&P 500 gained 72.39 points, or 1.86%, to 3,973.75 and the Nasdaq Composite added 180.66 points, or 1.59%, to 11,535.28. All 11 major S&P 500 sectors ended higher, led by financials, which climbed 3.2%. As the first-quarter earnings season draws to a close, 474 of the S&P 500 companies have reported results. Of those, 78 percent beat expectations, according to Refinitiv data.


Investors will get a glimpse of what policymakers are thinking when the Fed releases minutes from its most recent policy meeting on Wednesday. Economic indicators due this week are likely to further support the view that inflation peaked in March and show whether high prices have hurt consumers' purchasing power.


Looking ahead, companies are generally pessimistic about their forecasts for the current quarter, with 59 companies giving negative forecasts and 32 positive forecasts, compared with 37 negative forecasts and 52 positive forecasts for the same period last year, according to Refinitiv data.


Risk Warning: The above content is for reference only, and does not represent JRFX’s position. JRFX does not assume any form of loss caused by any trading carried out in accordance with this article. Please consult your financial planner for your investment portfolios and manage your own risk.


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