Europe’s main stock markets stabilized and the euro rallied against the dollar on Tuesday as traders looked forward to a key European Central Bank meeting later this week.
Asian stock indices ended mixed after an overnight sell-off on Wall Street fueled by renewed recession fears.
“Apple put the cat in the pigeons after a media report announced it plans to scale back hiring and growth spending next year in anticipation of the possible economic downturn,” noted Richard Hunter, head of markets at Interactive Investor.
The euro, meanwhile, rose more than 1 percent against the dollar as traders speculated whether the European Central Bank might hike interest rates more than expected to combat runaway inflation.
The ECB signaled that it will raise interest rates in the euro zone on Thursday for the first time in more than a decade, but is under pressure to do more to stem the spiral in prices.
It intends to raise borrowing costs by a quarter point, the first such move since 2011.
“In all likelihood, the ECB will hike rates by 25 basis points this week and 50 basis points in September,” noted Matthew Ryan, head of market strategy at finance firm Ebury.
“Nevertheless, we don’t rule out a 50 basis point rate hike at this week’s meeting.
“We’ve already seen most major central banks embark on hefty rate hikes over the past few weeks in an attempt to control unbridled price growth,” Ryan added.
The US Federal Reserve’s aggressive rate hikes this year have sent the dollar higher against most other currencies in recent weeks.
Last week, the euro reached parity with the dollar for the first time in almost 20 years, also amid mounting fears of a recession in the euro zone as high inflation hampers growth.
On Tuesday, the dollar briefly touched a record high above 80 rupees, with the Indian entity hit by massive capital outflows as the economy struggled.
While some believe inflation may have peaked, oil prices – the main reason behind the soaring prices – remain elevated.
Both major contracts fell on Tuesday after soaring more than 5 percent on Monday on expectations that Saudi Arabia would not open faucets any further, with a plea from US President Joe Biden apparently falling on deaf ears was.
Traders nervously watched Europe, where a 10-day maintenance shutdown of the Nord Stream 1 pipeline from Russia is due to end this week.
Many fear Vladimir Putin will keep it closed in retaliation for sanctions against Moscow over its invasion of Ukraine.
That would deal another blow to the already struggling eurozone economy and could send crude oil prices higher.
Supply fears trump worries about a slump in demand in China from another potential lockdown in Shanghai as officials scramble to contain another Covid-19 outbreak.
– Key figures at 1100 GMT –
London – FTSE 100: up 0.2 percent to 7,240.04 points
Frankfurt – DAX: Plus 0.1 percent at 12,978.47
Paris – CAC 40: up 0.1 percent to 6,094.85
EURO STOXX 50: FLAT at 3,512.87
Tokyo – Nikkei 225: up 0.7 percent at 26,961.68 (close)
Hong Kong – Hang Seng Index: down 0.9 percent at 20,661.06 (close)
Shanghai – Composite: FLAT percent at 3,279.43 (close)
New York – Dow: down 0.7 percent at 31,072.61 (close)
Euro/dollar: rise to $1.0257 from $1.0146 on Monday
Pound/dollar: UP at $1.2017 from $1.1950
Euro/Pound: UP at 85.32p from 84.88p
Dollar/Yen: DOWN at 137.52 yen from 138.13 yen
West Texas Intermediate: FALSE, up 1.0 percent to $101.63 a barrel
North Sea Brent Crude: FALSE, up 1.1 percent at $105.08 a barrel
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