Equities rebound slightly but negative outlook persists

LONDON, May 10 (Reuters) – European stock indices opened higher on Tuesday as risk appetite showed some recovery from sharp falls on Monday, but analysts said fears of weaker growth weighed still in the market.

Asian stocks slid to their lowest level in nearly two years overnight, before paring losses. Read more

The fall in equity markets so far this month is attributed to a combination of monetary tightening by major central banks and slowing economic growth.

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Last week, central banks in the United States, Britain and Australia raised interest rates and investors braced for further tightening as policymakers grappled with soaring inflation.

While those drivers persisted on Tuesday, markets rallied modestly, which U.S. stock futures predicted would continue until Wall Street opened.

At 07:52 GMT, the MSCI World Stock Index (.MIWD00000PUS), which tracks stocks from 50 countries, was trading flat, having hit its lowest since late 2020 earlier in the session.

The European STOXX 600 was up 0.8% (.STOXX), but the gain was small compared to its 6.6% loss so far in May.

S&P 500 futures rose about 0.8% while Nasdaq futures rose 1.3%.

Peter McCallum, interest rate strategist at Mizuho, ​​said the rebound was a natural correction after the previous session’s dips. Traders could also position themselves to take advantage of any improvement in sentiment coming from key U.S. consumer price index (CPI) data on Wednesday, he said.

“If headline inflation comes in and shows the month-over-month CPI moving in the right direction, that argues for a potentially more dovish Fed and price hikes,” McCallum said.

The dollar index was little changed, hitting a 20-year high on Monday. Meanwhile, the Australian dollar fell to its lowest level in nearly two years, hurt by fears of slowing economic growth. Read more

China’s export growth slowed to its weakest level in nearly two years, the data showed, as the central bank pledged to step up support for a slowing economy. Read more

Oil prices rose slightly, recovering from sharp declines on Monday, which were due to a combination of a stronger dollar, growing recession fears and COVID-19 lockdowns in China. Read more

Since Russia could cut off gas flows to Europe, German officials are preparing a contingency plan that could include taking over critical companies. Read more

European Union members could reach an agreement this week on the European Commission’s proposal to ban all oil imports from Russia, the French European affairs minister has said. Read more

European government bond yields rose slightly, with the German 10-year rate rising 1 basis point to 1.1% .

The US 10-year yield was at 3.0499%, having fallen since hitting 3.203% on Monday – a level not seen since 2018.

Gold also managed to recoup Monday’s decline, up around 0.4% .

Elsewhere, Bitcoin rose 5.5%, recovering part of its 11.6% plunge on Monday, its biggest daily drop since May 2021. At around $31,736, the cryptocurrency lost more than half of its value since hitting an all-time high of $69,000 in November.

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Reporting by Elizabeth Howcroft; Editing by Bradley Perrett

Our standards: The Thomson Reuters Trust Principles.

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