Next, markets will focus on the release of the minutes of the September monetary policy meeting
Wall Street stocks bounced on Monday to shake off early losses despite the ongoing Israel-Hamas conflict, suggesting the market had already assessed the impact of Hamas’ attack over the weekend. In part, investors continued to digest the Friday’s strong US employment report that showed the US economy added an estimated 336,000 jobs last month, exceeding expectations. The Dow Jones Industrial Average was higher by 0.59%, the S&P 500 gained 0.63%, while the tech-heavy Nasdaq Composite added 0.39%. The bond market was closed Monday for Columbus Day.
Following suit, Asian equities advanced on Tuesday, bolstered by the Federal Reserve’s dovish comments. Top Fed officials suggested that the rising Treasury yields could deter the Fed from further rate hikes. Tokyo’s Nikkei 225 jumped nearly 2.5% and the Hang Seng in Hong Kong picked up 0.74%. In Australia, the S&P/ASX 200 rose 1.01% while South Korea’s Kospi bucked the trend to shed 0.26%. On the negative side, China’s Country Garden warned that it might fail to meet all its offshore payment obligations on time.
In Europe, stocks opened higher today, rebounding after the previous session’s losses even as investors keep an eye on the conflict in the Middle East. The sentiment looks upbeat after some dovish comments from Fed speakers. There are also a number of Fed officials due to speak later today. On Wednesday, markets will focus on the release of the minutes of the September monetary policy meeting. US stock index futures are also nudging a little higher as the risk-off tone is quickly being reversed.
Meanwhile, the dollar stays relatively weak after the recent slide from fresh multi-month peaks registered last week. The USD index retreated towards the 106.00 zone that has been acting as support so far. A failure to hold above this level in the near term would pave the way to deeper losses. At this stage, the greenback tries to stabilize around the support zone in anticipation of fresh signals from the Fed. Later in the week, the US currency would be affected by FOMC meeting minutes, followed by a US CPI report.