- Majority of European equity markets extended gains on Monday and jumped to 7-month highs, with Dax rising 1.25%, the highest since end-March 2022 with continued support from China’s economic reopening and hopes of eased monetary tightening in the US after cooler wage growth.
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The export-oriented FTSE100 finished fifth consecutive session in green. Benchmark trades near all-time high at 7700 pts as upbeat news from China supports bulls.
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Major Wall Street indices also extend sharp gains from the prior week. Dow Jones is trading 0.4% higher, while the S&P 500 and Nasdaq rose 1.0% and 2.0% respectively.
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However, fresh comments from FED members slightly cooled the upward momentum. Fed's Bostic said it is fair to assume that the US central bank is willing to overshoot and rates will have to remain above 5% for an extended period of time, well into 2024. In his opinion inflation can fall to about 3% this year, though it will take time for the Fed's policy change to play out.
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Fed's Daly forecasts that the labor market will continue to slow, and inflation to come down in first quarter. She also expects PCE inflation in the low 3% range later this year and see PCE inflation closer to 2% by end 2024, at 2% early 2025. She is not going to wall off a 50 bps rate hike as unlikely, as he did not see the CPI data yet. Daly estimates that unemployment could rise to 4.5% or 4.6%.
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US consumer inflation expectations for the year ahead declined for a second month to 5% in December, the lowest level since July of 2021 and compared to 5.2% in November. Now, all eyes are on the CPI report, due on Thursday, for further hints regarding Fed's next move.
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Bed Bath & Beyond surged nearly 40% in another bout of extreme volatility ahead of tomorrow's earnings report. Company warned last week that bankruptcy is likely due to a massive drop in sales.
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Energy commodities also moved higher. NATGAS gains over 8.0% amid forecasts for higher gas demand next week than previously expected. WTI crude futures rose more than 3% to above $76 per barrel, however buyers gave up some of the gains in the evening.
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Precious metals trade mixed despite upbeat sentiment and weak dollar. Gold pulled away from daily high of $1883.00, while silver briefly broke above $24.00 level, however sellers regained control and price fell to $23.70.
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The dollar index plunged to 103 - a level not seen since June 2022. The dollar weakened across the board, with the most pronounced selling activity against EUR, GBP and AUD.
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Upbeat moods can also be spotted on the cryptocurrency market, where Bitcoin rose nearly 2.5% and is trading above $17300, while Ethereum jumped more than 5.0% above the $1330 mark.
GBPUSD pair has been moving in an upward trend in recent months. On January 6, the price bounced off the key support at 1.1880, which is marked with the lower limit of the 1:1 pattern and EMA100 average. The current target for the market bulls is located around 1.2450, where highs from December 2022 can be found. Source: xStation5
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