Monaco Journal - Stocks rebound on US rate cut bets

The broad gains followed a sell-off on Wall Street Friday in reaction to the jobs data and news that dozens of countries would be hit with US tariffs ranging from 10 to 41 percent.

Wall Street's main indices jumped higher at the opening bell, with the Dow climbing 0.6 percent.

European indices mostly started the week on the front foot, with Paris gaining 1.0 percent and Frankfurt rising 1.3 percent.

"Investors seem to be taking an optimistic view... betting on an increased likelihood of further monetary easing by the Fed after Friday's employment figures," said John Plassard, head of investment strategy at Cite Gestion Private Bank.

CME's FedWatch tool has investors seeing an 87.5 percent of the Fed making a quarter point cut in interest rates.

He noted, however, that "uncertainty reigns" as US President Donald Trump's tariffs are set to take effect on Thursday.

Switzerland's stock market dropped around two percent at Monday's open, its first session as it returned from a holiday after a tough 39-percent US tariff rate was announced.

The index pared most of its losses in early afternoon trading, with hopes the Swiss government, which announced it would make an improved offer to Washington, can negotiate a reduction in the levy, which is steeper than that imposed on the European Union and Britain.

London advanced, lifted by banking stocks after the sector was granted reprieve from the worst of feared compensation claims over controversial car loans dating back to 2007.

Lloyds Banking Group rose eight percent, while Close Brothers, listed on the FTSE 250, soared more than 20 percent.

Asian investors started the week mixed, with Hong Kong and Shanghai advancing while Tokyo fell.

Stocks had struggled Friday as US jobs growth missed expectation in July, with revised data showing the weakest hiring since the Covid-19 pandemic -- fuelling concerns that Trump's tariffs are starting to bite.

The president responded to the data by firing the commissioner of labour statistics, accusing her of manipulating employment data for political reasons.

Markets reacted more favourably on Monday, as the slowdown boosted hopes of Fed rate cuts to support the economy.

"Analysts are betting that rate-setters will prioritise recession avoidance over price controls," said Derren Nathan, head of equity research at Hargreaves Lansdown.

Observers also noted that news of Federal Reserve governor Adriana Kugler stepping down six months early gives Trump a chance to increase his influence on the Fed as he pushes for lower rates.

Kathleen Brooks, research director at XTB trading platform, said it is expected that Trump's choice to replace Kugler would be in line to succeed Fed Chairman Jerome Powell when his term ends in May.

"Whoever replaces Powell is likely to be a dove and is more likely to acquiesce to President Trump's demands to cut rates," she said.

Elsewhere, oil prices fell more than two percent after a sharp output increase by eight OPEC+ countries, with markets anticipating abundant supply.

- Key figures at around 1330 GMT -

New York - Dow: UP 0.7 percent at 43,840.86 points

New York - S&P 500: UP 0.7 percent at 6,279.42

New York - Nasdaq Composite: UP 0.9 percent at 20,839.29

London - FTSE 100: UP 0.4 percent at 9,100.83

Paris - CAC 40: UP 1.0 percent at 7,618.62

Frankfurt - DAX: UP 1.3 percent at 23,728.46

Tokyo - Nikkei 225: DOWN 1.3 percent at 40,290.70 (close)

Hong Kong - Hang Seng Index: UP 0.9 percent at 24,733.45 (close)

Shanghai - Composite: UP 0.9 percent at 3,583.31 (close)

Dollar/yen: DOWN at 147.11 yen from 147.43 yen on Friday

Euro/dollar: UNCHANGED at $1.1586

Pound/dollar: UP at $1.3310 from $1.3276

Euro/pound: DOWN at 87.06 pence from 87.25 pence

West Texas Intermediate: DOWN 2.4 percent at $65.75 per barrel

Brent North Sea Crude: DOWN 2.1 percent at $68.21 per barrel

burs-rl/lth

V.Colombo--MJ