Gains are likely to be limited as concerns over inflation and rate hikes persist
US stock markets extended losses overnight to see the third bearish session in a row as investors continue to express worries about major central banks’ hawkishness that could hurt economic growth. On the data front, US job openings rose to 11.2 million in July, up from a revised 11 million a month earlier. Meanwhile, the CB consumer confidence index jumped to 103.2 in August from a July reading of 95.3. The S&P 500 fell 1.1%, the Nasdaq Composite lost 1.1% and the Dow Jones Industrial Average slid nearly 1%.
Asian stock markets fell on Wednesday amid the prospect of continued aggressive Federal Reserve tightening. Also, investors assess a possible uptick in tension between China and Taiwan. The Shanghai Composite Index fell 0.86% after the data showed that the PMI for China’s non-manufacturing sector came in at 52.6 in August, down from 53.8 in July. Japan’s Nikkei 225 sagged 0.37% and Hong Kong’s Hang Seng added 0.14% to erase early losses.
In Europe, equities opened higher as investor sentiment has improved somehow following the Asian trading session. However, gains are likely to be limited as concerns over inflation and rate hikes persist. In general, markets remain muted as investors await the US NFP employment report due on Friday. US stock index futures are up more than 0.5% in early pre-market deals, with focus shifting towards the ADP’s new employment report for the private sector.
The US dollar ended slightly higher on Tuesday to finish below the 109.00 handle. Today, the USD index struggles for direction, lacking demand as risk aversion has abated. The US currency has entered a wait-and-see mode as traders await fresh catalysts to set the tone for currency markets. Should the upcoming economic data out the United States exceed expectations, the greenback may receive a boost ahead of the weekend due to the rising rate hike bets.
