World shares hit three-week high on easing recession fears

World shares hit a three-week high on Wednesday as strong US corporate earnings and the expected resumption of Russian gas supply to Europe allayed fears of a recession, though the dollar hovered near two-week lows on lower US rate hike expectations, Reuters reports.

Russian gas flows via the Nord Stream 1 pipeline are seen restarting on time on Thursday after the completion of scheduled maintenance, sources told Reuters this week, soothing investors’ concerns about gas supply to Europe in tat-for-tat measures in response to the Ukraine conflict. Read full story

Markets still expect a large 75-basis-point interest rate rise from the U.S. Federal Reserve next week to rein in white-hot inflation. But this represents a rowback from previous expectations of 100 bps.

In contrast, Reuters reported European Central Bank policymakers are mulling raising rates by a bigger-than-expected 50 basis points on Thursday.

“At the margins there is some good news like Nord Stream,” said Luca Paolini, chief strategist at Pictet Asset Management.

“Overall, there is no reason why the market should rally that much, but it springs from inflation expectations.”

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