By Dhara Ranasinghe

LONDON, (Reuters) – World stocks appeared to be leaving a volatile January behind on Tuesday. A series of reassuring remarks from Federal Reserve officials calmed rate-hike jitters and started a month on solid ground.

Pan-European equity benchmarks opened at more than 11% higher. U.S. stock futures rose and Japan’s blue chip rose 0.3%. This was due to Wall Street’s overnight gains. () [.N]

On Monday, U.S. stocks ended higher, thanks to a 3.5% gain for the Nasdaq tech-heavy index. The Nasdaq closed January strong after narrowly missing its worst start ever to the year.

The Bank recorded the weakest January performance in 2009, however.

Fed policymakers confirmed Monday that interest rates will rise in March. However, they were cautious about the future.

Four Fed officials declared that they believed it was the right time for the U.S. central banking to stop supporting a strong growing economy where inflation has reached its highest level in over 40 years.

Inflationary pressures must ease by 2022, according to Treasury’s top economist. This is due to lower goods demand, less supply bottlenecks, and the receding coronavirus epidemic.

John Flahive from BNY Mellon Wealth Management (NYSE:) Fixed Income Investments said it was because of the size of U.S. interest rate increases that markets were unable to settle.

He stated that “it was only a few months back that everyone thought the Federal Reserve would move relatively slowly with monetary policies, and might move three, maybe four, times.” Now the market prices in four (plus maybe five) Fed rate moves. Everyone was feeling a bit anxious.

PUSH BACK

On Tuesday, Australia’s central banks spoke out. As expected, it ended its A$275billion ($194.40 Billion) bond buying program. However, the central bank resisted market bets that would have allowed for an earlier rate increase.

The U.S. Institute for Supply Management’s Activity Index will be out Tuesday and could give an indication as to whether prices are falling for businesses.

The latest comments from the central banks seemed to provide some relief for world markets that have been shaken by expectations of a rate hike.

In January risk assets suffered, and global equities saw their worst month performance since March 2020 at the peak of the Covid-19 pandemic. Deutsche Bank (DE:) research showed.

The risk outlook has been affected by the increasing tensions between Russia and West over Ukraine. However, oil prices have seen a slight lift, with futures up roughly 17% so far in this year.

Brent dropped a little on Tuesday, at $89 per barrel. U.S. West Texas Intermediate crude fell marginally at $88.08/barrel.

Boris Johnson, British Prime Minister, will pledge Ukraine’s sovereignty during a Tuesday visit to Kyiv as part West’s diplomatic effort to stop any Russian invasion. Moscow has denied that there are any evidence of it.

The United States stated that it was in active talks with its allies regarding possible troop deployments by the United States to NATO’s Eastern flank.

After a Monday spike, the European sovereign borrowing cost were relatively stable. [GVD/EUR]

The German 10-year Bund yield remained at a little over 0% while U.S. Treasury yields stayed steady at 1.78%.

Many Asian markets will be closed for the Lunar New Year Holidays, which are observed in China, South Korea, and other countries.

MSCI’s World Equity Index reached its highest level for over a Week, with major bourses London, Paris, and Frankfurt rising as high as 1.24%.

The Australian dollar rebounded 0.3% on currency markets after a dovish message from the Reserve Bank of Australia. The Australian dollar was trading last at $0.7083.

As a result of aggressive Fed rate rise bets, the dollar was on the lower side against major currencies. Last week, the euro rose 0.2% to $1.1258, while sterling gained 0.25% and the dollar dropped 0.13% to 115 yen.