Stock markets extend recovery, dollar at multi-year highs

Stock markets powered higher Thursday, extending a recovery on bargain hunting after sharp losses at the start of the week.

In foreign exchange, the dollar traded around 20-year peaks versus the yen and at the highest level in more than five years against the euro as the Federal Reserve aggressively hikes US interest rates.

Trading is volatile across major assets as investors remain on high alert over a range of crises including the Ukraine war, surging inflation, higher interest rates and Chinese Covid lockdowns.

National Australia Bank’s Rodrigo Catril said “risk assets in general still need to navigate the consequences from what looks to be an increasingly more aggressive policy tightening by many central banks”.

He added that “China’s zero-Covid policy remains in place and the prospect of a protracted Russia-Ukraine conflict does not bode well for the energy prices and energy supply for Europe in particular.”

The ongoing earnings season has meanwhile seen a mixed bag of results that have weighed on tech firms, though there was some cheer from a forecast-beating reading by Facebook parent Meta on Wednesday, which analysts said could provide some relief to the sector.

Investors took heart also from a report by China’s state broadcaster CCTV that said officials had promised more policies on boosting the nation’s employment.

Unemployment in China — the world’s second-biggest economy after the United States — has recently jumped on fresh Covid lockdowns in major cities including Shanghai.

It comes at a time of surging inflation that is causing central banks around the globe to hike interest rates.

Sweden’s central bank on Thursday became the latest to lift rates, from zero to 0.25 percent.

The Federal Reserve is next week expected to lift US interest rates by half a point and signal further big increases through the year.

So far the European Central Bank has refused to tighten borrowing costs and on Thursday ECB vice-president Luis de Guindos said a surge in eurozone consumer prices is “very close” to reaching its peak.

Soaring prices are impacting consumers and businesses.

Unilever on Thursday announced a jump in revenue after the British consumer goods giant passed on higher costs to customers.

In other corporate news, shares in Standard Chartered soared 16 percent in London after the bank that is focused on Asia and emerging markets globally lifted its annual profits outlook after an upbeat first quarter.

– Key figures at 1100 GMT –
London – FTSE 100: UP 1.0 percent at 7,495.80 points

Paris – CAC 40: UP 1.3 percent at 6,531.51

Frankfurt – DAX: UP 1.2 percent at 13,964.11

EURO STOXX 50: UP 1.3 percent at 3,783.29

Tokyo – Nikkei 225: UP 1.8 percent at 26,847.90 (close)

Hong Kong – Hang Seng Index: UP 1.7 percent at 20,276.17 (close)

Shanghai – Composite: UP 0.6 percent at 2,975.48 (close)

New York – Dow: UP 0.2 percent at 33,301.93 (close)

Euro/dollar: DOWN at $1.0501 from $1.0556 late Wednesday

Pound/dollar: DOWN at $1.2472 from $1.2543

Euro/pound: UP at 84.18 pence from 84.14 pence

Dollar/yen: UP at 130.46 yen from 128.43 yen

Brent North Sea crude: DOWN 0.1 percent at $105.20 per barrel

West Texas Intermediate: UP 0.2 percent at $102.22 per barrel