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On Monday, European stocks extended their gains as investors weighed expectations for lower inflation. This fueled January’s rally in riskier assets. The Stoxx Europe 600 index rose for the fourth session in a row after posting its best first two weeks in a year, as easing inflationary pressures, China’s reopening, and mild weather boosted equities. The FTSE 100 in the United Kingdom traded within a whisker of a record high.

US futures fluctuated after Wall Street stocks closed at their highest level in a month on Friday. The Bloomberg Dollar Spot Index was approaching a seven-month low. Bond yields remained stable across Europe. Treasuries were not traded because US financial markets were closed for the holiday. On Friday, the 10-year US yield returned to 3.50%.

Earnings will be a key catalyst in the coming months as traders assess whether companies can navigate headwinds such as higher interest rates. The busy week will also feature corporate earnings from Wall Street titans Goldman Sachs Group Inc. and Morgan Stanley.

Markets may see another downshift in the Federal Reserve’s pace of rate hikes in February as the latest inflation print shows that “we are certainly on the right path,” according to a senior global macro strategist at TS Lombard.

Japanese And Other Markets

As the yen rebounded, Japanese markets remained driven by monetary policy speculation, with the Topix index trading lower.

Investors expect another surprise when the Bank of Japan releases its policy statement on Wednesday. The yen rose to levels last seen in May, and Japan’s benchmark 10-year bond yield climbed above the BOJ’s ceiling for the second day.

Bitcoin traded above $21,000 on Monday, following a weekend surge amid speculation that it had bottomed.

In other market news, iron ore fell after China pledged to tighten pricing oversight following the metal’s recent surge.

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