The Fed’s peers, the European Central Bank and Bank of England, are also keenly observed by market participants on their stance upon the interest rates journey ahead.
The selling pressure faded away abruptly on Tuesday, putting a halt on the bearish play going on in securities markets. The markets had been on a journey towards the south of price charts since the beginning of this year. This bear rally stopped to look for signals for the upcoming insights from the authorities of the Federal Reserve, though last week’s skyrocketing US jobs data hinted that there is going to be more raises to get inflation in control. The Fed’s peers, the European Central Bank and Bank of England, are also keenly observed by market participants on their stance upon the interest rates journey ahead.
Unexpected healthy Japanese wage data and talks of changing the central bank governors have thrown the Japanese Yen toward the sky. On the other end of the globe, the Australian Dollar went roaring after its Central Bank hinted that they are not stopping with the rise in interest rates till the situation is not up to a satisfactory level.
Equity markets opened in slight confusion as their currencies, the euro and pound, started lower against the Dollar.
BP came in matching shoulders with the oil giants to post record profits of $28 billion for the year 2022. The higher opening of FTSE is credited with the results of BP.
Joe Manimbo, a senior market analyst at Convera, told reporters that massive numbers of payroll data have again turned the spotlight towards the US and Jerome Powell, Fed chief. The expectations from market participants now look forward to Powell as the leader of hawkish stances. The Fed has already signaled that rate cuts this year are not expected from their end.
The coming days have major appearances lined up. Speeches from Isabel Schnabel and François Villeroy de Galhau, top policymakers of ECB. Two deputy governors and chief economist from the Bank of England are also expected to deliver speeches. Jerome Powell, chairman of the Federal Reserve and State of Union Address of the President of United States, Joe Biden.
The timing of Powell’s speech is 1740 GMT, and the second State of the Union address of Joe Biden is scheduled at 0200 GMT Wednesday.
This address is expected to throw Biden’s analogy to the public on matters such as social spending, tensions with China, the Russia-Ukraine conflict, roaring inflation, a mountain of debts, etc.
Securities Market play
Dow Jones Industrial Average (DJIA) was down 0.34 percent, Nasdaq Composite rose 0.03 percent, and the S&P 500 tanked 0.18 Percent. After heavy selling on the grounds of US jobs data, the stock market of the Asia Pacific region largely recovered its losses.
The MSCI index of Asia Pacific shares outside Japan rose just 0.2 percent, and the Australian ASX 200 fell 0.5 percent after the Australian Central Bank raised rates to 3.35 percent.
US WTI crude rose 1.54 percent to $75.25 per barrel, and alongside the Brent Crude went up to $81.84 per barrel, an increase of 1.05 percent. This unexpected oil move is the discounting of news of the demand recovery from the Chinese economy and supply chain disruptions due to the shutdown of terminals amidst a devastating earthquake in Turkey.
An update on Bond markets, benchmark bond yields were trading slightly higher than the previous week. The US 10-year treasury notes were at 3.65 percent; the 10-year German Bund was trading at around 2.32 percent. The 10-year yield of Italy was changing hands at 4.197 percent, creating a price differential of 185 basis points between the Italian and German bonds.
