EQUITIES
Shares in the Asia-Pacific were mixed on Monday, with Hong Kong’s tech-heavy Hang Seng index weighing down the region.
The Hang Seng index was down 0.80%, while in Singapore, the FTSE Straits Times Index slipped 0.62%.
The Japan’s Nikkei 225 was up 0.26%, while the Shanghai Composite in the mainland China gained 0.28%. S&P/ASX 200 in Australia and the South Korea’s KOSPI traded just above the flatline.
European markets meanwhile are also set to advance cautiously as it opens later today, as investors continue to monitor corporate earnings and key economic data points, while assessing the risk of recession.
OIL
Oil prices recouped early losses to eke out some gains, having suffered the worst week since April amid persistent concern about weakening demand as central banks keep tightening.
Brent crude futures had risen 1.06%, to $95.66 a barrel, while the U.S. West Texas Intermediate crude was at $89.72 a barrel, up 1.50% after slumping 10% last week on soft U.S. gasoline consumption data.
CURRENCIES
The dollar index, which tracks the greenback against a basket of its peers, stood at 106.608, not far off from a Friday peak of 106.93, the strongest since July 28.
The 10-year yield stood at 2.820%, marginally down from a two-week high of 2.869% touched last Friday. The two-year Treasury yield eased slightly to 3.213%, after reaching 3.3310% at the end of last week, a level not seen since mid-June.
Traders continue to expect for the Fed to raise its benchmark rate by 75 basis points in its next policy decision on Sept 21, matching the moves it made in June and July, and sending two-year yields up and further inverting the curve. It also means the central bank may need to keep borrowing costs higher for longer, contrary to market expectations for rate cuts in 2023. U.S. inflation figures later this week will provide more clues on the likely path.
GOLD
The rise in the dollar was a setback for gold, though it had managed to bounce from the lows hit on Friday to stand at $1,775.40 per ounce on Monday. U.S. gold futures was little changed at $1,790.50 per ounce.
ECONOMIC OUTLOOK
Stocks were mixed on Monday as cautious market sentiment weighed on investors’ risk appetite.
Sentiment in the market was clouded over external developments, including slowing growth in China and more aggressive rate hikes by the US Federal Reserve following stronger-than-expected U.S. jobs data last Friday.
Share markets were subdued, and the dollar held firm after an unexpectedly strong U.S. jobs report lowered expectations for a recession, but also bolstered the case for an increased likelihood of the Federal Reserve tightening monetary policy more aggressively to bring down inflation.
China stocks flitted in tight range, with the energy sector being partially countered by losses in consumer shares, as domestic COVID-19 outbreaks and tensions with the U.S kept market sentiment fragile. China's defence ministry on Monday defended its shelving of military talks with the U.S. in protest against House Speaker Nancy Pelosi's visit to Taipei last week, warning that Washington must bear "serious consequences."
The focus this week will be on the U.S. CPI due on Wednesday, and whether it can cement the odds of super-sized rate rises. Another important economic data being released this week include the PPI report, productivity and unit labour costs, wholesale inventories, federal budget, consumer sentiment, and export and import prices. For oil market players, the market report by IEA and OPEC monthly report is awaited.
On the data front in Europe, August’s Sentix economic sentiment index for the eurozone is due Monday morning.
Corporate earnings continue to drive share price movement. Some of the notable companies heading into the earnings confessional meanwhile includes Tyson Foods, Take-Two Interactive, Disney, and Rivian Automotive. In Europe, Siemens Energy, Porsche and BioNTech among the companies reporting before the bell on Monday.
