Morning Chronicle - Stocks waver as traders eye rate hikes, Ukraine

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Stocks waver as traders eye rate hikes, Ukraine
Stocks waver as traders eye rate hikes, Ukraine

Stocks waver as traders eye rate hikes, Ukraine

European stock markets rose on Monday but Wall Street fell as investors track corporate earnings, expected interest rate hikes and the standoff over Ukraine.

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European main equities rebounded from Friday's losses, with London's FTSE 100 and the Paris CAC 40 both finishing around 0.8 percent higher while the Frankfurt Dax was up 0.7 percent.

Wall Street's major indices were down in late morning trading, with the tech-heavy Nasdaq shedding 0.5 percent after rocky sessions last week.

A forecast-busting US jobs report Friday reinforced optimism that the world's top economy was well on the recovery track, but also ramped up expectations of an interest rate hike by the US Federal Reserve in March.

It comes as surging global inflation resulted in the Bank of England last week hiking its main interest rate for a second meeting in a row, while the European Central Bank signalled for the first time that it may raise borrowing costs this year.

"Volatility is likely to remain as the global markets adjust to the prospect of tighter monetary policies, as well as geopolitical tensions between Russia and Ukraine, and a mixed Q4 (fourth quarter) earnings season, which will continue to roll on this week," investment bank Charles Schwab said in a note.

With US inflation data this week tipped to show prices rising at a pace not seen in 40 years, traders fear that the Fed's rate hike plans could jeopardise the recovery.

Analysts say the US central bank could hike borrowing costs at least four times this year -- with some predicting as many as seven rises.

- 'Worst appears behind us' -

But analyst Craig Erlam at trading platform OANDA said investors have already prepared for potential rate increases.

"And with so much now priced in -- of course, there's always room for more -- we could see investors taking some comfort from the fact that the worst appears to be behind us," he said.

On the geopolitical front, investors are nervous over Western fears that Russia plans to invade Ukraine.

Traders are also watching for more corporate earnings statements this week after a disappointing report from Facebook parent Meta last week caused the company's shares to sink, dragging markets along.

Elsewhere Monday, oil prices continued their retreat after European benchmark contract, Brent North Sea crude, hit $94 -- the highest level for more than seven years.

"Oil prices are a little flat at the start of the week with the rally losing a little momentum after nuclear talks between the US and Iran appeared to make positive progress," Erlam said.

But the continued reopening of the world economy as well as a cold snap in the United States and uncertainty over the Russia-Ukraine stand-off are expected to keep crude futures well supported, according to analysts.

- Key figures around 1645 GMT -

New York - Dow: DOWN 0.2 percent at 35,030.85 points

London - FTSE 100: UP 0.8 percent at 7,573.47

Frankfurt - DAX: UP 0.7 percent at 15,206.64

Paris - CAC 40: UP 0.8 percent at 7,009.25

EURO STOXX 50: UP 0.8 percent at 4,120.56

Tokyo - Nikkei 225: DOWN 0.7 percent at 27,248.87 (close)

Hong Kong - Hang Seng Index: FLAT at 24,579.55 (close)

Shanghai - Composite: UP 2.0 percent at 3,429.58 (close)

Euro/dollar: DOWN at $1.1434 from $1.1453 Friday

Pound/dollar: UP at $1.3532 from $1.3527

Euro/pound: DOWN at 84.52 pence from 84.65 pence

Dollar/yen: DOWN at 115.06 from 115.21 yen

Brent North Sea crude: DOWN 0.6 percent at $92.76 per barrel

West Texas Intermediate: DOWN 1.2 percent at $91.22 per barrel