Investors look ahead to a US inflation report that could affect Fed rate cut expectations
Wall Street stocks bounced on Friday as investors cheered a stronger-than-expected jobs report. Job growth totaled 303,000 in March versus +200,000 expected. Wages rose 0.3% for the month and 4.1% from a year ago, both in line with estimates. Following the release, the 30-stock Dow climbed 0.8%, the S&P 500 gained 1.11% and the tech-heavy Nasdaq Composite advanced 1.24%. Despite the recovery, all three indexes posted a losing week. The Dow slid 2.27%, the S&P 500 declined 0.95%, while the Nasdaq shed 0.8%.
In Asia, equities were mostly higher on Monday as investors looked ahead to a US inflation report that could affect Fed rate cut expectations. Markets are now pricing in a 48% chance of an interest rate cut from the Fed in June. The U.S. government releases its March report on consumer prices on Wednesday. Japan’s benchmark Nikkei 225 jumped 0.78%, Sydney’s S&P/ASX 200 gained 0.2%, South Korea’s Kospi rose 0.13%. Hong Kong’s Hang Seng added just 0.05%, while the Shanghai Composite bucked the trend to slip 0.6%. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.17% higher.
European stocks opened on positive footing to start the week. After a mixed start to the session, the regional Stoxx 600 was up 0.3% after losing 1.2% last week, which was its worst performance since January. In the coming days, trading could be subdued as the European Central Bank meets Thursday for its latest monetary policy decision. June has been fully priced in by markets as the time for the first cut, while no movement in rates is expected this week.
In currencies, the US dollar retains bullish bias these days while refraining from a decisive breakout, however. The USD index has settled below the 103.50 zone that represents the immediate barrier at this stage. On the positive side, the greenback looks resilient above the 104.00 figure in anticipation of a US inflation report. Should the data surprise on the upside, the dollar may jump across the market as Fed rate cut expectations will continue to wane amid the elevated consumer prices. A decisive break above 104.50 would pave the way towards the 104.70 intermediate resistance on the way towards 105.00.
