3.5 C
New York
Friday, January 27, 2023

Marketmind: Fed up? Square up

Marketmind: Fed up? Square up
© Reuters. FILE PHOTO: A trader works on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 5, 2023. REUTERS/Andrew Kelly/File Photo

 

US500
-1.16%

Add to/Remove from Watchlist

Add to Watchlist

Add Position

Position added successfully to:

Please name your holdings portfolio

Type:

BUY
SELL

Date:

 

Amount:

Price

Point Value:

Leverage:

1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000

Commission:

 

Create New Watchlist
Create

Create a new holdings portfolio
Add
Create

+ Add another position
Close

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.

If Asian markets take their cue on Friday from Wall Street’s slump on Thursday, they will likely succumb to a bout of profit-taking on what has been a fairly positive start to the year.

But the relative outperformance may not last. The deepening gloom surrounding the Fed and its ‘higher for longer’ stance on interest rates will surely spread to Asia – likely soon, depending on how the latest U.S. employment data pans out.

December’s non-farm payrolls report on Friday comes at the end of a week in which surprisingly strong U.S. labor market data have pushed up Fed rate expectations, even though economic activity continues to scream slowdown if not recession.

US nonfarm payrolls – actual vs forecasts: https://fingfx.thomsonreuters.com/gfx/mkt/zgvobbqzdpd/PAYROLLS1.jpg

2023 Fed rate cut expectations: https://fingfx.thomsonreuters.com/gfx/mkt/akpeqqdxwpr/2023sofr2.png

The Fed’s implied terminal rate, according to ‘SOFR’ rates futures, is back above 5% for the first time in a month, and the amount of rate cuts priced in by the end of the year has fallen to a two-month low of 33 basis points.

The S&P 500 and Nasdaq are on track for their fifth consecutive weekly decline – the longest losing streak since April to May last year – marking a significant underperformance versus the rest of the world and Asia in particular.

The MSCI Asia ex-Japan index hit a four-month high on Thursday. It, Chinese equities and Hong Kong tech stocks are all firmly in the green for the week – HK tech is up nearly 9% – so traders may think it prudent to square up a little ahead of the payrolls report.

Watch foreign exchange markets, too – the dollar is up 1.5% so far this week, on course for its best week since September. Of course, a higher dollar, rising U.S. Treasury yields and tighter U.S. financial conditions is never a good mix for emerging markets.

On the local data front, the main event is Taiwan inflation for December.

Three key developments that could provide more direction to markets on Friday:

– U.S. non-farm payrolls (December)

– Fed’s Cook, Bostic, Barkin and George all speak

– Euro zone flash inflation (December)

Source: Investing.com

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

11,268FansLike
12,893FollowersFollow
742FollowersFollow
- Advertisement -

Latest Articles

Popular Articles