US equities finished mixed with Dow Jones losing 0.1% to 35,090 and S&P 500 increasing 0.5% to 4,501, while Nasdaq rallied 1.6% to 14,098. The markets digested a much stronger-than-expected January employment report that showed that jobs growth trounced the estimates, while unemployment rate has unexpectedly ticked higher. Nonfarm payrolls jumped by 467k jobs month-over-month and December’s figure was adjusted decisively higher to an increase of 510k from initial gain of 199k. Unemployment rate rose to 4%, while 3.9% was expected. Treasuries fell following the jobs data, as 2-year yield jumped 11 bps to 1.30%, the yield on the 10-year note was 9 bps higher at 1.92%, while 30-year bond rate rose 8 bps to 2.22%. The markets continued to grapple with whether the Fed may be more aggressive in its tightening campaign with treasury yields noticeably higher. As US yields rose US Dollar found support and DXY is currently trading around 95.48. The focus this week will be on CPI number on Thursday with 0.5% increase expected month over month and 7.3% year over year.
European stocks edged higher this Monday with DAX up 0.4%, CAC 40 climbing 0.3% and FTSE rising 0.4%. Calm is returning to the European markets after volatility last week generated by a strong US jobs report and the European Central Bank’s hawkish turn. Klaas Knot, the president of the Dutch central bank and a member of ECB Governing council, said on Sunday, that he expected ECB to raise interest rates in the furth quarter of this year, following on from President Christine Lagarde noting an increased concern over inflation on Thursday’s meeting. The geopolitical concerns with the crisis on the Ukrainian border remain in focus. French President Emmanual Macron, who is meeting Putin in Moscow, has said he thinks a deal to avoid full scale war in Ukraine is possible. Elsewhere, German Industrial Production dipped in December, falling by 0.3% month on month. EURUSD is lower this Monday at $1.1425. 10-year Bund crossed 20 bp following hawkish rhetoric from ECB.
Asian share markets mostly eased on Monday with MSCI’s broadest index of Asia-Pacific shares outside Japan dipping 0.3%. Japan’s Nikkei fell 0.8% and South Korea dropped 0.4%. China returned from the Lunar New Year break with jumps in equities and commodities, both CSI300 and Shanghai Composite were up 1.6% and 2% respectively. Hong Kong’s Hang Seng fell 0.4%. However, as data showed this Monday, China’s services activity saw its slowest pace of growth in five months in January. Caixin services purchasing managers index was 51.4, the lowest since August 2021. The lower-than expected growth could prompt the government to roll out more measures to support the economy.
Oil is mixed this Monday morning with Brent up 0.31% to $93.56 and WTI futures down 0.17% to $92.15. Both Brent and WTI rose more than 2$ on Friday, recording a seventh consecutive week of gains. Ongoing worries over supply disruptions continue to drive prices higher. Last week US restored sanctions waivers to Iran to allow international nuclear cooperation projects. Should the sanctions on Iran be completely lifted, the county would add to a global supply. Despite of this, with OPEC+ not reaching their output targets and US is not raising the output, market tone remains bullish and investment bankers are expecting Brent to hit $100 a barrel.