Wall Street stocks rose on Monday as investors prepared for a week of key central bank policy meetings, while oil prices slipped amid concerns about weak demand in China.
Wall Street’s benchmark S&P 500 rose 0.4 per cent, consolidating its move last week into bull market territory, while the tech-heavy Nasdaq Composite added 0.7 per cent.
But the rally eschewed oil companies, as the S&P 500 energy sector dropped 0.8 per cent, making it the biggest faller on the index.
Oil prices have fallen despite Saudi Arabia announcing an additional 1mn barrel a day production cut in July at the meeting of Opec+ at the start of this month, with traders focusing on strong supplies elsewhere and signs of relatively lacklustre demand growth in China.
Also on Monday, Goldman Sachs revised its end-of-year price estimate for Brent crude, the international benchmark, to $86 from $95, following two previous downward revisions in the past six months.
Brent fell 3.2 per cent to $72.39, while US marker West Texas Intermediate fell 3.7 per cent to $67.59.
Stocks were buoyed by bets that the Federal Reserve would resist raising interest rates when it meets on Tuesday and Wednesday, marking the first pause in the central bank’s 14-month campaign to tame inflation.
“With signs that the economy is shuffling off into a potential recession, the expectation is that [Fed policymakers] are likely to keep rates on hold,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
The latest US consumer price index report is published on Tuesday. It is expected to show that headline inflation slowed to 4.1 per cent year on year in May, according to economists surveyed by Reuters.
The reading would mark a significant improvement from the 4.9 per cent rate in April, after a 5 per cent figure in March, and would give the Fed more room to pause.
“Any deviation from the forecast path is likely to cause a jolt of volatility on markets,” said Streeter.
In Europe, the region-wide Stoxx 600 closed 0.1 per cent higher, while France’s Cac 40 added 0.5 per cent and Germany’s Dax advanced 0.9 per cent.
Economists are still convinced that the European Central Bank will raise its deposit rate by another quarter percentage point when policymakers meet on Thursday.
“We see another [quarter-point] rate increase from the ECB on Thursday as a near certainty,” said Matthew Ryan, head of market strategy at Ebury, a UK foreign exchange payments group.
“Although the Governing Council is once again likely to keep its cards close to its chest, and steer clear of providing any clear forward guidance.” he noted.
In Asia, equities rose, with China’s CSI 300 up 0.2 per cent, while Hong Kong Hang Seng index added 0.1 per cent and Japan’s Topix advanced 0.7 per cent.
