US and European futures are trading higher as investors continue to bet that the US economy is more than likely to have a soft landing as the US Jobs report released on Friday boosted optimism among traders and investors. The US economy reported 223K jobs during the last month of the 2022 against the forecast and the unemployment rate fell to 3.46% However, this may be too early to say for now because if you look at the prediction for oil prices for most of the Wall Street banks for this year, they see oil prices ending the year in triple digits. This means that the price stability element factor will continue to remain a main hurdle for major central banks that are using higher interest rates to bring inflation lower.
Overall, there is a lot of optimism among traders to begin this week as the US ISM services data plunged massively on Friday and that suggested that the Fed will be making another mistake if they continue to increase the interest rate more aggressively. This is because those higher interest rates could not only slow down the economy further but the prospects of a hard landing will increase as well for the US economy.
The main averages all concluded Friday’s trading session with gains for the week, with the Dow and S&P recording their best weekly performance since the month of November. On Friday, the Dow, the S&P, and the Nasdaq all finished with their best day since November 30, while the Nasdaq had its best session since December 29. The S&P 500 and the Nasdaq Composite each rose 2.28% and 2.56% to their respective totals, while the Dow jumped 700 points, which is equivalent to a 2.13% gain.
Asia
Asian markets have also joined a bull market. After being mired in a downward spiral for the most part of 2022 due to fears about the economic toll that viral restrictions would take, the stock market in China has gotten off to a solid start in 2023. The market has received an extra push, which has helped Asia rebound. This boost is the result of regulatory risks being reduced and further assistance measures being implemented to help resuscitate the struggling property industry.
Guo Shuqing, the party secretary of the People’s Bank of China, stated in an interview with People’s Daily that was published on Sunday that China’s economic growth will quickly rebound and return to its “normal” path as Beijing provides more financial support to households and companies to help them recover after the nation ended its Covid-Zero policy.
Forex
The decline in the value of the dollar continued on Saturday as investors gambled that the Federal Reserve would decrease the pace at which it raises interest rates since the index of services produced by the Institute for Supply Management is in the contraction region and pay growth is slowing.
Week Ahead
Traders will be paying close attention to the US inflation report for December, which is scheduled to be released on Thursday. This comes after the jobs report from the previous week failed to offer a clear picture, despite the fact that unemployment was at its lowest level in decades while wage gains were weak. Esther George of the Kansas City Federal Reserve warned on Friday that officials will have a difficult road ahead of them as they attempt to balance inflation and employment. This comes after others have previously emphasised that interest rates will be higher, and held there for longer than was initially anticipated.