ECB policymaker Francois Villeroy said earlier today that inflation is too high and too broad
Wall Street stocks saw another bearish session on Wednesday amid the intensifying debate over how quickly global central banks will raise interest rates amid stubbornly high inflation. Adding to a more cautious tone, JPMorgan CEO Jamie Dimon said the economy is headed for a “hurricane.” Meanwhile, the Federal Reserve’s Beige Book report stated that the US economy continued to grow in recent weeks. The Dow Jones Industrial Average shed 0.5%, the S&P 500 gave up 0.8% and the technology-heavy Nasdaq Composite retreated 0.7%.
Asian equity markets were mostly lower on Thursday, with investors staying cautious these days amid growing economic risks. Japan’s Nikkei 225 edged down 0.16%, South Korea’s Kospi fell 1.00%, and Australia’s S&P/ASX 200 lost 0.80% after the data showed that exports grew 1%, while imports contracted 1% in April. Bucking the trend, China’s Shanghai Composite climbed 0.42% after Fitch affirmed China’s ratings at ‘A+’ with stable outlook. The agency expects activity to recover in the second half of this year.
In Europe, stocks opened marginally higher on Thursday, with investors continuing to assess fresh data on inflation and economic activity as consumer prices marked a seventh consecutive record high in May. Also, investors continue to monitor developments in geopolitics after the recent EU announcement of a partial ban for Russian oil imports. Elsewhere, European Central Bank policymaker Francois Villeroy said earlier today that inflation is too high and too broad while European growth will be slower in next two years.
In currencies, the dollar gives up yesterday’s gains, targeting the 102.00 handle again. The USD index failed to extend the recent rally that was capped by the 102.75 region as the selling in equities and bonds hit pause at this stage. Now, the focus shifts to the ADP’s private sector employment report, followed by NFP employment data due on Friday. EURUSD is targeting the 1.0700 level that represents the immediate resistance after a two-day sell-off.