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World stocks rallied on Tuesday as traders held onto hope that interest rates will soon peak and fall later this year, even if the latest US jobs data supported the case for a May hike by the Federal Reserve.
Trading was largely sluggish as many markets reopened after a long holiday weekend.
European stocks added 0.5% (.STOXX), U.S. equity futures pointed to a positive Wall Street open , and Japan’s blue-chip Nikkei rallied over 1% (.N225), reported Reuters.
Bolstering the case for global inflation easing further this year, data showed China’s consumer inflation hit an 18-month low and factory-gate price declines sped up in March as demand remained weak.
Investor morale in the euro zone meanwhile improved in April after a surprise dip in March, a survey showed.
South Korea’s central bank held rates steady for a second consecutive meeting on Tuesday, while the Bank of Canada is expected to leave rates unchanged when it meets on Wednesday.
Friday’s non-farm payrolls suggested labour markets remain resilient, boosting expectations for a 25-basis-point (bps) US rate increase in May. Markets price in a roughly 70% chance of a May hike, having last week priced such a move as a coin toss.
“It seems that we are currently in an environment that the world is looking at a soft landing and the need not to over-tighten policy,” said Nordea chief analyst Jan von Gerich.
