European stocks and U.S. stock futures rose while the dollar weakened

Commodities are on the rise and WTI is back to $100 a barrel

Risky assets rise as dollar weakness comes as relief

European stocks and U.S. stock futures rose while the dollar weakened as investors cut rates on how aggressively the Federal Reserve would tighten policy, easing recession fears. 

The Stoxx Europe 600 rose to its highest level in more than a month, led by mining and energy stocks. Futures for the S&P 500 and Nasdaq 100 indexes added at least 1%. West Texas Intermediate crude was trading around $100 a barrel, while the Bloomberg Dollar Spot Index was down 0.5%, extending a retreat from an all-time high. 

Traders have returned to expectation of a 75 basis point Fed rate hike in July after flirting with the prospect of a 100 basis point move last week after data showed no easing of stubbornly high price pressures. But the decline in long-term inflation expectations in the U.S. has helped calm fears that Fed policy is unmatched by the hottest pressure in four decades.

Still, the outlook remains worrying for many investors. The International Monetary Fund will "substantially" cut its forecast for global economic growth in its next update as countries run out of options to deal with deteriorating risks.

"Risk rewards at these levels have certainly improved, but since we haven't yet fully assessed the recession, it's hard to say markets are screaming cheaply," said Anastasia Amoroso, chief investment strategist at iCapital. 

Elsewhere, asian stocks rose 1.4%, helped by a jump in Chinese tech firms. Bitcoin has climbed above $22,000 amid widespread crypto progress.

Commodities were generally stronger after U.S. President Joe Biden's trip to the Middle East ended without a firm commitment from Saudi Arabia to increase oil supplies. Wheat rose after a five-day decline and copper rose. 

U.S. natural gas futures have increased profits above the $7 level as scorching temperatures across the country boost demand for air conditioners. The heat wave in Britain and France has pushed up European natural gas prices, exacerbating the region's worst energy crisis in decades.

Officials and traders are keeping a close eye on whether the Nord Stream gas pipeline from Russia will fully return to service later this week, when scheduled maintenance ends. Moscow has already restricted supplies to the continent amid tensions over its invasion of Ukraine.

"The possibility that Russia will stop or severely reduce gas exports to Europe should keep markets on edge in the near term," Mizuho International Plc strategists Peter McCallum and Evelyn Gomez-Lichty wrote in a note to clients.