Stocks seek direction after interest rates-driven rally

BLOOMBERG

Stock and bond markets steadied after last week’s blockbuster rally, with traders still optimistic that US and European central banks may start cutting interest rates as soon as next year.
Europe’s Stoxx 600 index held to recent gains and US futures added about 0.2%. Asian markets jumped, with South Korea’s Kospi finishing more than 5% higher after regulators banned short selling. The dollar fell for a fourth day. Crude futures rose more than 1% after Saudi Arabia and Russia reaffirmed they will stick with their supply curbs through year-end.
Global markets are finding firmer footing after recent US data pointed to a cooling economy, leading traders to price lower rates by June.  More information about how policymakers see the trajectory of inflation may come later in week, with speeches due from Federal Reserve Chair Jerome Powell and Bank of England governor Andrew Bailey.
“There’s a bit more reason for investors to be more optimistic that the Fed is probably done with rate hikes, but one should not let one’s guard down,” Vasu Menon, managing director for investment strategy for OCBC Bank Singapore, said on Bloomberg Television.  “If the economy proves to be more resilient, if inflation proves to be more stubborn, bond yields could go up once again.”
Last week’s market bounce was more of a bear market rally than the start of a sustained upswing, particularly in light of weaker earnings revisions and macro data, according to Morgan Stanley’s Michael Wilson.
Among individual stock market movers, Ryanair Holdings Plc jumped 6.3% after announcing its first regular dividend.  Tesla rose in pre-market trading after Reuters reported the company would produce a new, more affordable electric car model in Germany.