US stock futures rose more than 1%, while European stock indexes were in the green in a big week for the region. The European Central Bank is set to raise interest rates for the first time in more than a decade on Thursday, the same day the bloc hopes to resume gas supplies from Russia. Italy, meanwhile, is once again in the grips of a political crisis. read more Sign up now for FREE unlimited access to Reuters.com Register The pan-European STOXX 600 (.STOXX) was up 1.3 percent at 1030 GMT after falling 0.8 percent last week. Gains on Monday were broad-based and led by miners (.SXPP), energy stocks (.SXEP) and banks (.SX7P). “It’s a wild week this week, there’s so much going on,” said James Rossiter, senior global strategist at TD Securities. “The ECB is a huge focus, there’s not much room for the ECB to surprise, I think 25 bps is locked in… and then there’s Italy and Nord Stream.” Italy’s borrowing costs rose on Monday and investors’ demand for a premium to hold Italian debt over safer German bonds was at its highest in a month, as political turmoil in Europe’s fourth-largest economy continued. Prime Minister Mario Draghi tried to resign on Thursday after the 5-Star Movement, a coalition partner, failed to back him in a confidence vote. The Italian president rejected Draghi’s resignation. read more Draghi is expected to address parliament on Wednesday, but the yield on Italy’s 10-year bond rose 10 basis points (bps) on Monday to 3.48%, pushing it close behind German bond yields to their highest level in about a month. 235 bps. “We expect volatility to remain high until then in response to various rumors about whether he will be firm on his resignation or willing to stay put,” UniCredit analysts said in a note. “Any indication that could increase the likelihood of an early election will ultimately be negative for BTPs and widen the spread.” Overnight, an index of Asian shares (.MIAPJ0000PUS) rose more than 1 percent, its biggest daily gain in nearly two months, boosted by gains in Chinese shares as regulators encouraged lenders to extend loans to specialty real estate projects. It also came as the dollar, which had its strongest start to a year in recent memory, retreated on Monday. /FRX Uncertainty will haunt the ECB at a policy meeting where a 25bps rate hike is likely to begin, with markets hanging on details of an anti-fragmentation tool aimed at reducing pressure on borrowing costs for the union’s most over-indebted members. read more Friday’s rally on Wall Street reverberated across global markets with MSCI’s broadest index of Asia-Pacific shares outside Japan ( .MIAPJ0000PUS ) rising 1.4 percent, having fallen 3.5 percent last week. A broader index of global shares (.MIWO00000PUS) rose 0.4 percent. Chinese blue chips (.CSI300) added 1.0% as the country’s central bank chief pledged to help the economy, although Shanghai also announced more coronavirus tests across the region. read more Traders are returning to expecting a 75 basis point rate hike from the Federal Reserve next week after flirting with the prospect of a 100 basis point move to curb inflation. “We don’t think central banks will be able to raise interest rates to the extent they or the market forecasts, given the headwinds to already subdued economic growth,” said Steve Ellis, global CIO of fixed income at Fidelity International. Corporate earnings will be in focus this week with Goldman Sachs Group Inc ( GS.N ), Bank of America Corp ( BAC.N ), International Business Corp ( IBM.N ), Netflix Inc ( NFLX.O ), Tesla Inc. O and Twitter Inc ( TWTR.N ) due to reporting. Of the 35 S&P 500 companies that have reported, 80% have beaten analysts’ expectations, according to Refinitiv. Analysts now expect full-year second-quarter earnings growth of 5.6%, up from 6.8% at the start of the quarter. Rising interest rates and a strong dollar were a major drag on non-yielding gold, which held steady at $1,713 an ounce after falling 2% last week. Oil prices rose on the risk wave. President Joe Biden continued his trip to the Middle East hoping to strike a deal to increase production, having seemingly left Saudi Arabia empty-handed. After an early decline, Brent crude rose $2.54, or 2.5%, to $103.70 a barrel, after rising 2.1% on Friday. Sign up now for FREE unlimited access to Reuters.com Register Additional reporting by Marc Jones in London. edited by Kirsten Donovan and Bernadette Baum Our Standards: The Thomson Reuters Trust Principles.
