news/AMZN/2023.01.23/Stocks, euro gain amid divergent Fed, ECB rate hike outlooks.txt

*Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn*Graphic: World FX rates http://tmsnrt.rs/2egbfVhNEW YORK/LONDON, Jan 23 (Reuters) - Global equity
markets edged higher on Monday as hopes of a less aggressive
Federal Reserve buoyed investor sentiment, while the euro hit a
nine-month peak against the dollar on the rising likelihood of
more jumbo interest rate hikes in Europe.The start of another big week for U.S. corporate earnings is
expected to test a recent bounce in beaten-down technology and
growth stocks as speculation grows that the Fed on Feb. 1 will
only raise its key rate by 25 basis points.European shares edged up 0.41% as declining natural
gas prices have eased recession fears in the euro zone, despite
expectations the European Central Bank will hike rates by 50
basis points on Feb. 2 and in March, a Reuters poll shows.The euro shot to $1.0927 as it climbs from a
two-decade low of $0.953 in September, but the single currency
later pared gains against the dollar to $1.0867."The combination of a risk-off mood in the stock market and
the divergence between the Fed and ECB allowed the euro to make
new highs above 109," said Marc Chandler, chief market
strategist at Bannockburn Global Forex in New York.Gains in chipmakers boosted the technology sector, which has
been hit by recession concerns amid high interest rates, leading
Microsoft Corp, Amazon.com Inc and Alphabet
Inc to lay off thousands of employees.Investors are anxious to hear from corporate executives
about their economic outlook in a week in which Microsoft posts
results on Tuesday, Tesla Inc and IBM on
Wednesday and Intel on Thursday.Analysts expect year-over-year fourth-quarter earnings from
S&P 500 companies to decline 2.9%, according to IBES Refinitiv
data, compared with a 1.6% decline at the beginning of the year.The Dow Jones Industrial Average rose 0.72%, the S&P
500 gained 0.99% and the Nasdaq Composite added
1.55%, pushing ahead from gains last Friday, its best session
since late November.Trading was thin in Asia, as markets in China, Hong Kong,
Singapore, Malaysia, South Korea and Taiwan were closed for the
Lunar New Year holiday.MSCI's gauge of stocks across the globe
gained 0.82%.Money markets are pricing in a 97.8% chance that the Fed
will raise rates by 25 basis points next month, and have lowered
the likely peak rate to 4.906% in June, below Fed projections of
its target rate staying above 5% into next year.."The market’s still quite buoyant at the moment," said Peter
Chatwell, head of global macro strategies trading at Mizuho, who
said markets were being driven by the idea that U.S. inflation
has peaked.Investors are waiting for euro zone and U.S. flash PMI data
on Tuesday, which are expected to show less severe economic
contractions than the previous month, according to analysts
polled by Reuters. The data is forecast to show more improvement
in Europe than in the United States.Sterling traded at $1.2368, down 0.20%, while the
Australian dollar, seen as a proxy for risk appetite, rose 0.56%
to $0.7005. The Japanese yen weakened 0.70% at 130.49 per
dollar.Treasury yields crept up to further erode a recent bond
rally that some investors say was overdone in reflecting fears
that the U.S. economy may soon enter a recession.The yield on 10-year Treasury notes rose 2.4
basis points to 3.508%.Euro zone bonds were little changed, with the benchmark
10-year German yield at 2.191%.Crude prices rose to extend last week's gains on the back of
a stronger outlook thanks to an expected economic recovery in
top oil importer China this year.U.S. crude recently rose 0.34% to $81.92 per barrel
and Brent was at $88.43, up 0.91% on the day.(Reporting by Herbert Lash, additional reporting by Elizabeth
Howcroft in London, Editing by Christina Fincher, Chizu Nomiyama
and Sharon Singleton)