Where equities head next will likely depend on several big US economic reports due this week
Wall Street stocks advanced on Monday, recovering nearly a half of last week’s losses. The Nasdaq rose 1.1%, while the S&P 500 added 0.7% and the Dow Jones climbed 0.3%. Where equities head next will likely depend on several big US economic reports due this week on inflation and retail sales ahead of the Federal Reserve meeting. An upbeat tone at the start of the week was helped by reports saying there was a consensus among the Fed not to raise rates at next week’s meeting. In individual stocks, Tesla shares jumped 10% after Morgan Stanley upgraded the stock.
Despite a rally on Wall Street, most Asian stocks fell on Tuesday as investors expressed a cautious tone ahead of key US inflation print that would influence US rates and stocks direction. Hong Kong’s Hang Seng dropped 0.4%, while the Shanghai Composite fell nearly 0.2%. South Korea’s Kospi shed 0.8%, while Japan’s benchmark Nikkei 225 surged nearly 1.0% as the yen retreated after yesterday’s bounce. Also finishing in positive territory, Australia’s S&P/ASX 200 added 0.2%.
In Europe, equities opened slightly higher to start the day, with investors shifting focus to the latest meeting by the European Central Bank later in the week. On the data front, the UK unemployment rate rose to 4.3% in July, while the August claimant count rose less than 1,000 last month. In Spain, the latest data showed consumer prices rose 2.6% in the year through August, up from a 2.3% increase in July. US stock index futures were mixed in early pre-market trading.
Meanwhile, the US dollar holds steady today after yesterday’s retreat. After finding support around 104.40, the USD index bounced back to the 104.80 zone, adding nearly 0.2% on the day. As traders nervously await the US CPI and retail sales data, the greenback is unlikely to regain the 105.00 handle in the near term. In a wider picture, the dollar remains bullish after eight weeks of gains in a row. Should the upcoming data disappoint, however, the DXY may distance itself from the 105.00 mark later in the week.
