World stocks rise, dollar struggles on Fed bets

World shares rose on Monday and the dollar was pinned near five-week lows on hopes of an eventual slowdown in U.S. monetary tightening following sharp interest rate hikes in June and July, Reuters reported.

Helping to mellow the mood was news that Shanghai authorities would cancel many restrictions on businesses resuming work from Wednesday, easing a city-wide lockdown that began two months ago.

The MSCI’s benchmark for global stocks rose 0.6% to its highest in more than four weeks by 0745 GMT, driven by a positive open in Europe and strong gains in Asia overnight. The index is up 0.4% so far this month.

The pan-European STOXX 600 equity benchmark gained 0.7%, while Japan’s Nikkei (.N225) added 2.2% and Chinese blue chips firmed 0.7%.

Although Wall Street will be shut for the Memorial Day, U.S. futures were trading. S&P 500 e-minis rose 0.9%, having rallied 6.6% last week in their best run so far this year, while Nasdaq e-minis added another 1.3%.

Investors have seized on hints that the Federal Reserve, once it has hiked aggressively over the next two months, might then slow its tightening.

The chance of a less hawkish Fed was enough to see Treasuries rebound, with 10-year note yields just above a six-week low at 2.743%. That is down from a peak of 3.203% on May 9.

The steadier market mood has seen the safe-haven dollar and yen decline, while the euro was boosted by hawkish comments from European Central Bank (ECB) officials who have been flagging a rate hike as early as July.

The euro rose to a five-week high and was last up 0.2% at $1.0750 , having risen 1.6% last week. The dollar index fell to a fresh five-week low of 101.38 and was last down 0.2% at 101.50 , after shedding 1.3% last week.

China’s offshore yuan rose 0.85% after hitting a one-week high of 6.6548 per dollar.

The pullback in the dollar helped gold off its recent lows, sending the metal up 0.5% at $1,862 an ounce .