Markets shift their focus towards Thursday’s CPI report that will set further tone for investors
Wall Street stocks finished higher on Friday to close the week in negative territory, however. Investors received conflicting signals from the latest payroll numbers. The labor market added 261,000 jobs while the unemployment rate rose to 3.7% from 3.5%. The Dow Jones Industrial Average gained 1.26%, the S&P 500 advanced 1.36%, and the Nasdaq Composite rose 1.28%. Of note, the tech-heavy Nasdaq Composite suffered its largest percentage weekly drop since January. Now, market participants shift their focus towards Thursday’s CPI report that will set further tone for investors.
Asian equities were mostly up on Monday, including stocks in Shanghai even as China said it would stick to its strict zero-Covid policy. Of note, China recorded 4,420 new Covid-19 infections on Saturday, the most in six months. MSCI’s broadest index of Asia-Pacific shares outside Japan added 1.0% while Japan’s Nikkei 225 rose 1.2% and South Korea gained 0.8%. On the data front, China’s exports fell by 0.3% and imports also fell by 0.7% to come in far short of expectations.
In Europe, stocks opened in mixed territory on Monday, with US stock index futures falling after the weekend as investors look indecisive ahead of the upcoming US inflation report. Market participants also look ahead to Tuesday’s midterm election, which will determine which party will control Congress. Elsewhere, ECB’s Villeroy said it could take 2-3 years for inflation to return to target. A hiking pace could be more flexible and slower, added the central bank’s official in his latest remarks.
Meanwhile, the US dollar has steadied on Monday after a solid sell-off witnessed ahead of the weekend. The USD index has settled around 111.00 after a strong rejection from the 113.00 zone on Friday when the bulls were spooked by weaker wages and unemployment data. As such, EURUSD rallied back above the key moving averages to turn unchanged on the weekly charts. Still, the shared currency failed to regain parity, holding below 1.0100 despite a weaker greenback. In the immediate term, the pair could come under renewed selling pressure as risk sentiment deteriorates.