Dollar struggles, shares buoyant as business activity data set the mood

LONDON, Jan 24 (Reuters) – The euro hit a nine-month top against the dollar and global shares hit multi-month highs on Tuesday after upbeat data on European trade activity and risk appetite lifted corporate earnings. increased.

Euro zone business activity made a surprise return on growth in January, according to a survey, the latest sign that the bloc’s recession may not be as deep as feared.

S&P Global’s Flash Composite Purchasing Managers’ Index (PMI) rose to 50.2 this month from 49.3 in December, staying above 50 for the first time since June.

Britain’s Flash Composite Purchasing Managers’ Index (PMI), however, fell from 49.0 in December to 47.8 in January, the lowest level since January 2021.

MSCI’s world index (.MIAPJ0000PUS) was up 0.1% and touched a new seven-month high, as Europe’s broader Stoxx 600 index (.STOXX) held steady after overnight shares rose in the US, and some in Asia The very first day in parts.

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The MSCI world index is up nearly 7% since the start of the year on hopes central banks globally are nearing the end of their interest rate-raising program as well as optimism fueled by economic data.

Britain’s FTSE 100 (.FTSE) was down 0.4%, underperforming the broader European market, and domestically-focused mid caps (.FTMC) gave up early gains after PMI data traded near flat.

Most of Asia’s markets were closed for the second day for the Lunar New Year, but Japan’s Nikkei (.N225) closed at a more than one-month high, recouping all its losses since the Bank of Japan’s surprise policy change last month. Happened. Australian shares also gained momentum. (.AXJO)

“We are still very Fed-focussed, with the meeting coming up next week. The market is of an extremely optimistic view that there will be two rate cuts by the end of the year and I think that’s what’s affecting sentiment at the moment,” said Fiona Cincotta, an analyst with CityIndex.

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“We’re watching the US PMI today,” she said.

The Federal Reserve’s rate setting committee begins its two-day meeting on February 1. Inflation has begun to decline in recent months, and signs the US economy is slowing could prompt the Fed to start thinking about its next steps after raising rates. Last year.

The biggest of the day on the corporate earnings front is Microsoft, which will report its earnings after the market closes.

Results in both the United States and Europe will help guide investors on whether the renewed optimism about the economy that has buoyed equities in recent weeks is based in reality.

Expectations of an improved economic outlook in Europe also weighed on currency markets, and along with suggestions the US Federal Reserve is slowing raising rates than the European Central Bank continues to support the euro and other neighboring currencies. is kept

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The European common currency was steady at $1.0865, just off its nine-month high of $1.0927 a day earlier. Sterling turned negative after British data and retreated from Monday’s seven-month high, falling 0.25% to $1.234.

This left the dollar index near a six-month low of 102.04.

Globally, government bonds edged lower with the benchmark US 10-year Treasury yield down 3 basis points to 3.4913%. Germany’s 10-year yield fell 1 basis point to 2.18%.

Yields move inversely to prices.

Oil held largely on recent gains from optimism around China’s reopening. Brent crude was down 0.1% at $88.1, close to Monday’s eight-week high of $89.09.

Gold was up 0.2%, hitting its first nine-month top, as the precious metal continued to be supported by a weaker dollar.

Editing by Christina Fincher

Our Standards: The Thomson Reuters Trust Principles.

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