Equities Recover Quickly from Friday's Plunge, Dollar Eases
08 August 2022
Sentiment has been positive so far on Monday, with stock indices erasing nearly all their Friday's losses while the USD fell, despite investors feeling more hawkish than a week ago.
US jobs market remains solid
According to data released by the Bureau of Labor Statistics on Friday, nonfarm payrolls increased by 528,000 in July, considerably above the market consensus of 250,000. As a result, the likelihood of a 75 basis point Fed rate rise in September is currently 68.5%, up from 29% a week ago, per the CME Group FedWatch Tool.
Moreover, Fed Governor Michelle Bowman stated that she firmly favors huge rate rises to combat inflation at a weekend appearance at the Kansas Bankers Association.
Investors will focus on the US consumer price index due on Wednesday. Economists anticipate that the annual inflation rate will decline from 9.1% in June, the highest increase since 1981, to 8.7% in July.
From other news, the Eurozone's Sentix investor confidence improved markedly from -26.4 to -25.2, missing estimates of -24.7, and remained near two-year lows.
Chinese tensions near Taiwan continue
Meanwhile, on Monday, China allegedly carried out military exercises in the sky and seas surrounding Taiwan. In addition, prior to the weekend, China's foreign ministry declared that Nancy Pelosi, the speaker of the US House of Representatives, would face sanctions for her trip to Taiwan.
According to figures from China, the trade surplus increased from 97.94 billion USD in June to 101.26 billion USD in July. Exports increased by 18% annually during that time, above experts' expectations of a 15% increase.