World shares hit three-week high on easing recession fears

World shares hit a three-week high on Wednesday as strong U.S. 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 U.S. rate hike expectations, Reuters reported.

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.

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.”

S&P 500 futures ESc1 and Nasdaq futures NQc1 both rose more than 0.4%, after stronger-than-expected results from U.S companies overnight including Netflix Inc NFLX.O.

The S&P 500 .SPX gained 2.8% on Tuesday while the tech-heavy Nasdaq Composite .IXIC added 3.1%.

MSCI’s world stock index <.MI WD00000PUS> gained 0.36% after rising 2% on Tuesday.

European stocks .STOXX were steady and Britain’s FTSE 100 .FTSE rose 0.54%, lifted by oil and mining stocks and shrugging off data showing UK inflation at a new 40-year high.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1%, driven by a 1.65% jump in resources-heavy Australia .AXJO and 1.4% gain in Hong Kong stocks .HSI. Japan’s Nikkei .N225 surged 2.67%.

Chinese shares .CSI300 rose 0.34%, lagging gains in other markets, as the central bank kept its benchmark lending rates unchanged amid a shaky economic recovery from COVID lockdowns.

The Bank of Japan also delivers a policy decision on Thursday, but is not expected to make any changes to its ultra-easy stance.

A closely-watched part of the U.S. yield curve remained inverted, with the two-year yield US2YT=RR last at 3.1979%, down from the previous close of 3.2310%.

The yield on benchmark 10-year Treasury notes US10YT=RR stood at 2.9874%, compared with its close of 3.019% on Tuesday.

German 10-year bond yields DE10YT=RR fell 4 bps to 1.235%.