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Wall Street rallies as Biden hints lifting Trump-era tariffs on Chinese goods

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Wall Street stocks surged following president Joe Biden's remarks. Photo: Nicolas Datiche/Sipa Press/Pool/Anadolu Agency via Getty
Wall Street stocks surged following president Joe Biden's remarks. Photo: Nicolas Datiche/Sipa Press/Pool/Anadolu Agency via Getty

European markets and Wall Street stocks rallied on Monday as investors shrug off rampant inflation and concerns about global growth.

The FTSE 100 (^FTSE) was up 1.5% on the day to 7,502 points, France’s CAC (^FCHI) gained 0.8% and the DAX (^GDAXI) rose 1.1% in Frankfurt.

FTSE 250 (^FTSE) firm Moonpig (MOON.L) gained 9.7% after it agreed to buy gifting experiences platform Smartbox for £124m. The small-cap index closed up 1.4%.

Sterling (GBPUSD=X) jumped 0.7% against the dollar after Bank of England governor Andrew Bailey defended the central bank amid claims it stoked inflation by letting demand get out of hand in response to the pandemic. It was little changed at 84p against the euro (EURGBP=X).

It comes as the head of the International Monetary Fund (IMF) warned the global economy faces its "biggest test since the Second World War".

At the start of the World Economic Forum in Davos on Monday, Kristalina Georgieva, IMF managing director, said Russia’s invasion of Ukraine was "devastating lives, dragging down growth and pushing up inflation".

Georgieva urged countries not to "surrender to the forces of geo-economic fragmentation that will make our world poorer and more dangerous".

It is the forum's first in-person meeting since a two-year hiatus due to the coronavirus pandemic. The main topics high on the agenda at the Swiss ski resort include the Ukraine conflict, inflation and the risks from food shortages and climate change.

Ukraine president Volodymyr Zelensky, European Commission president Ursula von der Leyen, Germany’s chancellor, Olaf Scholz, IMF chief Kristalina Georgieva, NATO head Jens Stoltenberg and US climate envoy John Kerry, are among the speakers.

Read more: Bank of England chief economist supports further interest rates hikes

Across the pond, US indexes bounced on the open following a volatile trading week after president Joe Biden said he is considering easing tariffs on Chinese imports, put in place by his predecessor Donald Trump.

Wall Street’s S&P 500 (^GSPC) advanced 59.90 points, or 1.5% to 3961,26. The tech-heavy Nasdaq (^IXIC) was up 0.9%, while the Dow Jones (^DJI) surged 2% at London's close.

It comes after the S&P 500 briefly entered bear market territory on Friday, falling 2.3% at one point during the session – 20% below its January peak – what would have been considered a bear market.

"The S&P500 closing lower for the seventh week in succession, making a fresh 18 month low, and briefly retracing 50% of the move from its 2020 lows to its record highs late last year," said Michael Hewson, chief market analyst at CMC Markets.

Last week, the Nasdaq hit a 18-month low, posting its worst losing streak since 2001 when the dotcom bubble burst in 2001. The Dow notched its eight-weekly loss in a row, the longest losing streak since 1932.

Read more: UK house prices hit new record high as mortgages outpace rents

"One of the main characteristics of the recent weakness in US markets, has been concern over valuations given the length of time of this current rally," Hewson added.

"While the weakness in tech stocks has led to this current weakness there is increasing evidence that a combination of rising inflation, interest rates, and concerns over a weakening US economy could see a recession by year end."

Asian stocks traded mixed overnight as concerns over China's COVID curbs weighed on sentiment.

In Tokyo, the Nikkei (^N225) rose 1%, while the Hang Seng (^HSI) edged 1.3% lower in Hong Kong and the Shanghai Composite (000001.SS) was flat.

Watch: How does inflation affect interest rates?

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