By Peter Nurse
Investing.com - European stock markets traded cautiously higher Monday, at the start of a week that includes a host of central bank meetings, including the all-important Federal Reserve.
At 3:40 AM ET (0840 GMT), the DAX in Germany traded 0.7% higher, the CAC 40 in France rose 0.2% and the U.K.’s FTSE 100 climbed 0.2%.
Global equity markets turned higher last week, boosted by studies suggesting the Omicron variant of the Covid-19 virus caused less serious damage in patients than previous versions and current vaccines, including boosters, could cope with the variant.
This confidence could be tested this week as a number of high profile central banks hold their monetary policy meetings, including the U.S. Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank.
It’s the Fed that investors will pay particular attention to as expectations have been building that the U.S. central bank will announce a quicker phase-out of its bond purchases on Wednesday after Chairman Jerome Powell’s hawkish testimony to Congress.
Central banks meeting this week will have to account for an uncertain economic outlook, as countries impose restrictive measures to curb the spread of the Omicron Covid-19 variant. British Prime Minister Boris Johnson, under pressure from his own staff's flouting of social distancing rules, warned on Sunday that the U.K. faces a “tidal wave” of infections.
Meanwhile, geopolitical tensions are on the rise after the Group of Seven warned Russia on Sunday that it would face “massive consequences” if it invades Ukraine.
U.S. intelligence has warned that Russia could be planning an offensive on Ukraine as early as next year, involving up to 175,000 troops. The Russian RTS index fell 1.2% to test its lowest in over four months.
In corporate news, Air France KLM (OTC:AFLYY) stock traded flat after the airline announced Monday that it has redeemed 500 million euros ($565 million) from an earlier French state loan issued to help it cope with the pandemic, and it could also raise new equity.
Frasers (LON:FRAS) stock rose 0.8% after the British sportswear and fashion group, formerly known as Sports Direct (LON:FRAS), announced plans to start a new share buyback program of up to 70 million pounds ($93 million).
Credit Suisse (SIX:CSGN) stock rose 0.6% after the Swiss banking giant announced a revamp of its executive board, seeking to move on from a difficult year.
Oil prices rose Monday, extending recent gains on optimism that vaccine boosters will be able to combat the Omicron variant to the extent that its spread doesn’t lead to a significant hit to global crude demand.
By 3:40 AM ET, U.S. crude futures traded 0.4% higher at $71.97 a barrel, while the Brent contract rose 0.5% to $75.53. Both benchmarks rose around 8% last week, their first weekly gain in seven.
Additionally, gold futures rose 0.2% to $1,787.85/oz, while EUR/USD traded 0.3% lower at 1.1280.