Stock jumped on concerns that inflation may have peaked and the central bank was close to ending its rate-hiking cycle.

　　

US stock stopped a three-day rally on Monday as hawkish comments from Federal Reserve and data showing slower growth undermined market risk sentiment. Stocks had surged in July on speculation that rampaged inflation may have peaked and the central bank was closed to the end of the rate-hiking cycle on signs. While more than half of the S&P 500 firms’ earnings have exceeded analyst estimates so far, the rate of earnings is still under the 62% average pace set in the last five quarters. Moreover, Fed officials’ suggestion to the central bank pointed out that a more aggressive interest hike is necessary, which brings the market back to the dark from the sunlight in July.

The benchmarks, S&P500 and Dow Jones Industrial Average both slid on Monday. S&P500 declined by 0.28% daily after reaching its best month since 2020. Seven of eleven sectors stayed in negative territory as Energy, Financial, and Real Estate performed worst among all groups, falling 2.18%, 0.89%, and 0.89% respectively, while it’s worth noting that outperforming sector CONS Staples rose 1.21%. The Nasdaq 100 was nearly not changed and the MSIC World index advanced with a
1.2% rally for the day.

Main Pairs Movement

The US dollar declined on Monday, as investors weighed the possibility of the Federal Reserve will not raise interest rates as hawkish as a few months ago. Besides, the jobs data will be announced at the end of this week, which may be confirmed that the improvement in the labour market is a slowdown. The DXY index dropped with a 0.43% loss for the day. However, the greenback has been up roughly 10% for the year so far, triggered by Fed’s aggressive rate hike policy.

The GBP/USD advanced by 0.65% for the day, as the cables witnessed new transactions amid the US dollar under selling pressure caused by dialled-down Fed monetary policy. GBP/USD reached a daily high level above 1.229 in the middle of the US trading session. Meanwhile, EURUSD also touched its daily high level above 1.027 at the beginning of the US session. Nevertheless, the unchanged unemployment rate played a key stuck for European Central Bank(ECB) to push the interest rate hike policy.

Gold rose 0.35% daily. Ahead of NFP and job data on Friday, XAUUSD witnessed fresh upside traction and touched a daily high above 1774$ mark. Meanwhile, WTI and BRENT dropped 3.79% and 4.80% respectively on Monday.

Economic Data

Currency	Data	Time (GMT + 8)	Forecast
GBP	Composite PMI (Jul)	16:30	52.8
GBP	Services PMI (Jul)	16:30	53.3
USD	ISM Non-Manufacturing PMI (Jul)	22:00	53.5
USD	Crude Oil Inventories	22:30