# Global stocks trade higher at the end of a volatile month
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-01-31
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: World Stocks Rise Amid Optimism on Inflation, Oil Prices
Meta Description: Discover how positive U.S. Treasury forecasts are boosting global stocks, as inflationary pressures ease and supply chain disruptions ease in 2022.
URL: https://financedigest.com/global-stocks-trade-higher-at-the-end-of-a-volatile-monthhtml

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By Katanga Johnson

WASHINGTON (Reuters) – World stocks climbed higher on Monday as investors digested new optimism from the U.S. [Treasury’s top economist that inflationary pressures should ease](https://www.financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-ease.html "Wall Street stocks power higher as Treasury yields and dollar ease") in 2022 due to weaker demand for goods, easing supply bottlenecks and a receding coronavirus pandemic.

Wall Street closed higher on Monday, coupled with an earlier rise in European shares, that helped stabilize [investor sentiment](https://www.financedigest.com/6-months-to-go-until-brexit-and-investor-sentiment-remains-bold.html "6 months to go until Brexit and investor sentiment remains bold") after a series of volatile sessions.

In a statement released alongside the Treasury’s quarterly borrowing estimates, Assistant Secretary for Economic Policy Ben Harris said he expects energy prices to stabilize in 2022, but geopolitical instability could [push prices higher](https://www.financedigest.com/powells-warning-on-higher-u-s-rates-pushes-dollar-to-3-mth-high.html "Powell’s warning on higher U.S. rates pushes dollar to 3-mth high").

Still, investors said the backdrop for equities remains uncertain as other central banks tighten policy – the Bank of England is expected to [hike rates again on Thursday – and another jolt higher in oil prices adds to inflationary worries](https://www.financedigest.com/stocks-falter-as-economic-worries-nag-nz-delivers-big-rate-hike.html "Stocks falter as economic worries nag, NZ delivers big rate hike").

The pan-European STOXX 600 index rose 0.72%.

Lunar New [Year holidays](https://www.financedigest.com/100-years-of-uk-holidaying-habits.html "100 YEARS OF UK HOLIDAYING HABITS") made for thin trading conditions in Asia. MSCI’s broadest index of Asia-Pacific [shares outside Japan closed 1.11% higher](https://www.financedigest.com/asia-shares-creep-higher-wary-on-fed-and-boj-outlooks.html "Asia shares creep higher, wary on Fed and BOJ outlooks").

On [Wall Street](https://www.financedigest.com/asian-stocks-edge-up-before-u-s-jobs-data-defying-wall-street-selloff.html "Asian stocks edge up before U.S. jobs data, defying Wall Street selloff"), the Dow Jones Industrial Average rose 1.18%, while the S&P 500 gained 1.89%. The tech-heavy Nasdaq added 3.41%, but has borne the brunt of selling and is down 14% from a [record peak last year](https://www.financedigest.com/analysis-europes-record-ipo-year-has-a-sting-in-its-tail.html "Analysis-Europe’s record IPO year has a sting in its tail").

The MSCI World index, while higher on Monday, remains down 6.2% in January – the [worst start to the year since](https://www.financedigest.com/uk-factories-suffer-worst-month-since-may-2020-as-economy-stumbles-pmi.html "UK factories suffer worst month since May 2020 as economy stumbles – PMI") 2016\. Before Friday’s rebound, the index had been [headed for its worst January since the global financial](https://www.financedigest.com/the-hidden-financial-woes-of-international-students-heading-for-the-uk.html "The Hidden Financial Woes of International Students Heading for the UK") crisis in 2008. It last gained 1.8%

This is not the classic selloff [affecting lower quality underperforming companies](https://www.financedigest.com/factbox-companies-potentially-affected-by-italys-election.html "Factbox: Companies potentially affected by Italy’s election"). This selloff is driven not by fundamentals but by the action of [central banks at a time](https://www.financedigest.com/stock-pickers-reckon-its-time-to-move-on-from-central-banks.html "Stock pickers reckon it’s time to move on from central banks") when growth is very strong,” said Flavio Carpenzano, investment director at Capital Group.

“For years you were like a spoiled child, you could get all the money you wanted and for free and you could buy what you wanted, you didn’t care that much about quality. Now it’s the other way round, you have to be more disciplined so you need to look carefully at valuation,” Carpenzano added.

The standoff over Ukraine also remains a thorn in the markets’ side, with [concerns a Russian invasion would cut vital gas supplies](https://www.financedigest.com/oil-gains-as-russian-supply-cuts-temper-concerns-over-rate-hikes-high-stocks.html "Oil gains as Russian supply cuts temper concerns over rate hikes, high stocks") to Western Europe. Moscow denies any plan to invade.

[OIL STEADY](https://www.financedigest.com/oil-prices-steady-after-u-s-stockpile-swell.html "Oil prices steady after U.S. stockpile swell")

Oil prices ended January about 17% [higher in their biggest monthly gain](https://www.financedigest.com/londons-ftse-100-edges-higher-set-for-fourth-weekly-gain.html "London’s FTSE 100 edges higher, set for fourth weekly gain") in a year, boosted by a supply shortage and political tensions in Eastern Europe and the Middle East. \[O/R\]

The most-active Brent contract, for April delivery, traded 74 cents higher, or 0.8%, to settle at $89.26 per barrel. The front-month contract, for March delivery, which expired at the end of the session, rose $1.18, or 1.3%, to finish at $91.21.

U.S. West Texas Intermediate crude rose $1.33, or 1.5%, to close at $88.15 a barrel.

In economic news, data showed [euro zone economic](https://www.financedigest.com/euro-zone-economic-sentiment-rises-in-january-to-seven-month-high.html "Euro zone economic sentiment rises in January to seven-month high") growth slowed quarter-on-quarter in the last three months of 2021, as expected.

Data out on Sunday showed [China’s factory activity slowed in January as a resurgence](https://www.financedigest.com/618-shopping-festival-in-china-makes-a-resurgence.html "618 shopping festival in China makes a resurgence") of COVID-19 cases and tough lockdowns hit production and demand.

Yields of U.S. Treasuries that are most sensitive to [inflation expectations hovered near their highest levels since February](https://www.financedigest.com/french-inflation-revised-upwards-in-february-to-7-3-final-figures.html "French inflation revised upwards in February to 7.3% – final figures") 2020 on Monday, capping a bond market selloff this month that by some measures is the worst in 13 years.

The [yield on 10-year Treasury](https://www.financedigest.com/wall-st-indexes-mixed-treasury-yields-tick-up-as-higher-rates-loom.html "Wall St indexes mixed, Treasury yields tick up as higher rates loom") notes was up 0.9 basis points to 1.789%, while the two-year U.S. [Treasury yield](https://www.financedigest.com/stocks-fall-treasury-yields-rise-upon-final-2022-trading-day.html "Stocks fall, Treasury yields rise upon final 2022 trading day"), which typically moves in step with interest rate expectations, was up 0.5 basis points at 1.177%

The bond market may have settled into a flattening yield curve, reflecting an outlook for several [rate hikes](https://www.financedigest.com/hopes-of-slowdown-in-rate-hikes-bolster-shares-ahead-of-u-s-gdp.html "Hopes of slowdown in rate hikes bolster shares ahead of U.S. GDP") over the course of this year and then at least a pause as the economy adjusts,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

As well as the Bank of England, the European [Central Bank meets](https://www.financedigest.com/dollar-skulks-at-eight-month-low-central-bank-meetings-in-focus.html "Dollar skulks at eight-month low, central bank meetings in focus") this week but is expected to stick to its argument that inflation will recede over time.

Investors will eye big U.S. [data releases this week](https://www.financedigest.com/wall-st-seen-steady-ahead-of-inflation-data-fed-later-in-week.html "Wall St seen steady ahead of inflation data, Fed later in week") include the ISM readings on manufacturing and services, and the January jobs report.

The headline U.S. [payrolls number is expected](https://www.financedigest.com/instant-view-us-may-payrolls-rise-up-than-expected.html "Instant View: US May payrolls rise up than expected") to be soft given a surge in COVID-19 cases and adverse weather. The median forecast if for a rise of just 155,000, while forecasts range from a gain of 385,000 to a drop of 250,000.

The U.S. dollar fell as [investors consolidated gains ahead of the monthly employment report](https://www.financedigest.com/influx-of-one-time-investors-swapping-stocks-for-bricks-and-mortar-reports-agency.html "Influx of ‘one-time’ investors swapping stocks for bricks and mortar reports agency") this week, taking a pause after a furious rally that took the currency to a 1-1/2-year high on Friday.

The dollar index fell 0.646%, with the euro up 0.89%, putting it on [track for its largest daily fall since](https://www.financedigest.com/the-nasdaq-100-on-track-to-have-its-best-week-since-march-2010.html "The Nasdaq 100 On Track to Have its Best Week Since March 2010") Jan. 12. On the month, the greenback was up 1.4% after [hawkish noises from Fed](https://www.financedigest.com/stocks-sag-as-hawkish-fed-cools-china-rally-awaits-us-jobs-data.html "Stocks sag as hawkish Fed cools China rally; awaits US jobs data") Chair Jerome Powell last week bolstered the U.S. dollar.\[FRX/\]

A [mix of consolidation and month-end position-squaring has nudged the dollar](https://www.financedigest.com/stocks-mixed-dollar-gains-after-robust-inflation-jobs-data.html "Stocks mixed, dollar gains after robust inflation, jobs data") off its highs,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

An events-filled week ahead threatens to keep [market volatility](https://www.financedigest.com/italys-a2a-trims-green-investment-plan-citing-economy-volatile-markets.html "Italy’s A2A trims green investment plan citing economy, volatile markets") high. The buck appears to have peaked for now as Friday’s jobs [report is forecast to show another month of tepid hiring,”](https://www.financedigest.com/stablecoin-tether-hires-bdo-italia-for-monthly-proof-of-reserve-reports.html "Stablecoin Tether hires BDO Italia for monthly proof-of-reserve reports") Manimbo added.

(Reporting by Katanga Johnson in Washington; Additional reporting by Wayne Cole in Sydney and Tommy Wilkes and Sujata Rao in London; Editing by Will Dunham, Alison Williams and Marguerita Choy)


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