Stocks

The S&P 500 index added 0.2% amid upbeat sentiment about first-quarter earnings, following a lackluster week for technology stocks.

The S&P 500 rose 1.1 percent, after edging upward for the week on Friday. The Dow Jones Industrial Average rose 0.7 percent, and the technology-heavy Nasdaq Composite was 1.3 percent higher. All three indexes notched their fourth straight day of gains in trading.

Indexes have recorded a steady climb in recent sessions, after fears about steep interest-rate hikes began to ease. Falling commodity prices have raised hopes that the worst of inflation is over. And the labor market continues to be an important source of economic strength. Measurements of business activity have been better than expected.

“What’s primarily driving markets right now is investor optimism that inflation is moving lower,” said Michael Arone, the chief investment strategist for the US ETF business at State Street Global Advisors. “We’re in that in-between where earnings season is behind us and it does revert back to really the main theme of the year, which is the Fed and what the end target of the funds rate should be.”

In commodities markets, Brent crude was up 1.58 per cent at $US94.31 a barrel, gold was up 0.48% at US$1,725.10. In local bond markets the Australian 2-year yield increased to 2.96% and the 10-year to 3.63%. Abroad, the 2-Year US Treasury notes yielded 3.57% and the 10-Year US Treasury notes brought 3.36%.

The Australian dollar was trading at 68.81 US cents, up from Thursday's close of 68.42. The Wall Street Journal Dollar Index, which measures the U.S. currency against 16 others, slipped to 100.31.

Asia

Exchanges in Shanghai and Hong Kong were closed on Monday for a public holiday.

Japanese Stocks Close Higher on railway, airline shares, after reports that the government is considering lifting border measures to woo foreign visitors. West Japan Railway is up 3.4% and ANA Holdings rises 2.5%. The Nikkei Stock Average climbs 1.2% to 28542.11. Investors are eyeing the war in Ukraine and its effect on the trade of crude oil and other commodities. USD/JPY trades at 143.42 versus 142.58 late Friday in New York. The yield on 10-year Japanese government bonds holds steady at 0.245 percent.

Europe

European stocks edged higher on Monday, as investors monitored reports of Ukrainian military successes against Russia in northeast Ukraine. The Pan-European Stoxx Europe 600 and France’s CAC 40 rose more than 1% and Germany’s DAX surged 2%.

The Ukraine breakthrough changes the risk/reward picture for markets, though some of that is net neutral, with larger tails to either extreme, Evercore says. “On the one hand, the swift progress by Ukraine gives some opportunity for Russia to decide that its maximal war objectives are not achievable,” Evercore analysts write. "On the other hand, no one may be more dangerous than Putin with his back against the wall."

The FTSE 100 finished 1.7% higher as sliding natural gas prices in Europe and expectations of inflation in the U.S. continue to support and extend on last week’s bounce, according to CMC Markets UK analyst Michael Hewson in a note. Also, a lack of earnings news has made it easier for the index and others to bounce, says IG analyst Chris Beauchamp in a note. But the next rate decision from the Federal Reserve will soon loom large, Beauchamp points out. “The wider picture remains tough, and it is reasonable to expect indices to turn lower in the weeks to come,” Beauchamp says. Kingfisher was the biggest riser of the day, closing 6.1% higher, while Howden Joinery and Tesco were both up 5.5%.

North America

US stocks gained Monday, ahead of an important inflation report that is anticipated to reveal continued cooling in consumer prices.

The S&P 500 rose 1.1% after ending the previous week on Friday higher for the week. The Dow Jones Industrial Average rose 0.7% and the technology-heavy Nasdaq Composite gained 1.3%. All three bought up for a fourth day in a row.

Indexes have bounced higher over the last few sessions since big interest-rate hikes fears dissipated. Plunging commodity prices have also raised expectations that the worst of inflation is over. And the job market has continued to be a main engine of economic strength. Measures of business activity have been stronger than expected.

“For now, the most powerful thing moving markets is investors' hope that the inflation numbers are going to come down,” said Michael Arone, the chief investment strategist for the U.S. ETF business at State Street Global Advisors. “We’re a little bit in no-man’s land where earnings season is over and it becomes all about what has been the biggest story of the year — the Fed and what is the end-game target federal funds rate.”

Investors are expected to focus this week on U.S. consumer-price inflation data due on Tuesday.

The data is likely to demonstrate that August was the second straight month of easing inflation pressures. The figures will help officials at the Federal Reserve assess how far their campaign against spiking prices has gone and how much more they need to raise interest rates. Fed officials have an interest-rate meeting next week.

“If inflation slows more rapidly than expected, I think you will find that the Fed will be able to gain more confidence that their job may be closer to being done than they thought,” said Stephanie Lang, chief investment officer at Homrich Berg.

Inflation probably peaked, she continued, though markets will be hard-pressed to move much higher until the Fed starts to ease up on monetary tightening. “What the market is pricing in at the moment is a soft landing, (which) to me is fairly optimistic,” she said.

Though some indicators show inflation losing steam, investors have largely bet that it will take more months of tightening by Fed officials to be confident that price pressures have dulled. Many investors anticipate that the Fed will raise interest rates by another 0.75 of a percentage point next week.

“It will take three months of comforting inflation data and signs of a cooling labour market for the Fed to start discussing a less dovish tone,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note.

Stock in the drugmaker Bristol-Myers Squibb rose 3.2% after the Food and Drug Administration approved its psoriasis treatment, Sotyktu.

Gilead Sciences rose 4.2% after the company announced that it settled a patent dispute over its H.I.V. therapies.

Walt Disney rose 0.9%. Activist investor Dan Loeb appeared to back off his call Sunday to get the company to spin off ESPN.

Twitter dropped 1.7 percent after the company’s lawyers announced that Twitter planned to force Elon Musk to abide by his purchase agreement. Mr. Musk’s lawyers on Friday added a whistleblower payment to the list of reasons for abandoning the takeover.