Equities are losing traction, as Jerome Powell resurfaces with a fresh post-NFP appearance, says Joshua Mahony, senior market analyst at online trading platform IG.
Stocks slump as GBPUSD declines ease FTSE 100 losses
“Market sentiment remains on the rocks after a week of volatility that saw a bumper payrolls figure hammer home earlier warnings of additional monetary tightening at the Fed. The RBA reiterated the recent message reiterated across the US and Europe, with rates expected to rise further in the absence of any dramatic collapse in employment and economic output. Fears of additional rate hikes bring upside for the dollar, although the subsequent GBPUSD decline helps alleviate FTSE 100 declines thanks to the impact on earnings valuations for internationally-focused firms. For that reason, the FTSE 100 outperformance today highlights how the index should be propped up if market declines are accompanied by dollar strength. ”
Powell speech eyed after Friday’s payrolls surprise
“Jerome Powell looks to ensure market sentiment remains heavily central bank focused, with todays scheduled appearance at the Economic Club of Washington raising uncertainly for traders. With the Federal Reserve looking to remain data dependant, traders are faced with a swift opportunity to see how Friday’s bumper jobs report and services sector rebound impacts the outlook going forward. For the most part this strength would be deemed an enabler for any central bankers seeking to drive down inflation, with the so-called soft landing potentially bringing a higher for longer approach to monetary policy.”
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