Beaten-down US stocks rally as Lagarde comments lift euro / Photo: © POOL/AFP/File
Beaten-down US stocks rally as Lagarde comments lift euro
Beaten-down Wall Street stocks rallied Monday amid hopes that equities have bottomed, while the euro advanced after European Central Bank chief Christine Lagarde signaled the end of negative interest rates.
US stocks, which have spent much of 2022 in the red and have seen relatively few quietly benign sessions, spent almost the entire day in positive territory before finishing solidly higher.
"It's a day where the market has finally been able to catch its breath, at least for now," said Art Hogan, strategist at National Securities.
US stocks began with momentum following gains in Europe as President Joe Biden hinted at relief in trade tariffs.
Appearing in Tokyo for the launch of a new Asia-Pacific trade initiative, US President Joe Biden said he was considering removing some of the punitive import duties enacted by former president Donald Trump on China.
Biden also announced that 13 countries had joined a new, US-led Asia-Pacific trade initiative.
Adding to that positive, some market watchers pointed to technical factors that suggest stocks may have reached a short-term bottom, setting the stage for a rebound.
The S&P 500 finished up 1.9 percent at 3,973.75. The broad-based index briefly tumbled into a bear market on Friday, a drop of more than 20 percent from its peak.
"After seven straight weeks of declines, bargain hunters are out in force, snapping up stocks after they fell to fresh 18-month lows on Friday," said Fiona Cincotta, senior financial markets analyst at City Index.
Meanwhile, the euro jumped more than one percent against the dollar after Lagarde said the central bank would probably draw a line under the era of negative interest rates by September owing to soaring eurozone inflation.
The ECB is "likely to be in a position to exit negative interest rates by the end of the third quarter," Lagarde wrote in a blog post.
"That's something that we were waiting for, so long," noted Swissquote analyst Ipek Ozkardeskaya.
"Lagarde is finally showing that the (inflation) situation is serious in Europe as well," she told AFP.
Central banks around the world are increasing interest rates to tackle the highest inflation in decades, but the ECB has so far refused to follow the likes of the Federal Reserve and Bank of England in hiking borrowing costs from record-low levels.
Eurozone inflation soared by an all-time high 7.5 percent in April.
The surge has been driven by soaring energy and food prices, as economies reopen from pandemic lockdowns and following Russia's invasion of Ukraine.
- Key figures at around 2030 GMT -
New York - Dow: UP 2.0 percent at 31,880.24 (close)
New York - S&P 500: UP 1.9 percent at 3,973.75 (close)
New York - Nasdaq: UP 1.6 percent at 11,535.27 (close)
London - FTSE 100: UP 1.7 percent at 7,513.44 (close)
Frankfurt - DAX: UP 1.4 percent at 14,175.40 (close)
Paris - CAC 40: UP 1.2 percent at 6,358.74 (close)
EURO STOXX 50: UP 1.4 percent at 3,708.39 (close)
Tokyo - Nikkei 225: UP 1.0 percent at 27,001.52 (close)
Hong Kong - Hang Seng Index: DOWN 1.2 percent at 20,470.06 (close)
Shanghai - Composite: FLAT at 3,146.86 (close)
Euro/dollar: UP at $1.0692 from $1.0564 on Friday
Pound/dollar: UP at $1.2587 from $1.2480
Euro/pound: UP at 84.92 pence from 84.64 pence
Dollar/yen: UP at 127.90 yen from 127.88 yen
Brent North Sea crude: UP 0.8 percent at $113.42 per barrel
West Texas Intermediate: FLAT at $110.29 per barrel
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C.Abad--ESF
