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US stocks declined lower on Monday, surrendered their early gains and ended a choppy session lower after two Federal Reserve officials highlighted the central bank’s resolve to be persistent until it brings inflation down meaningfully. Fed Vice Chair Lael Brainard said that it would be appropriate soon for the central bank to slow its pace of interest-rate hikes, which provided some support to the market sentiment. However, she further emphasized that the Fed had additional work to do to bring inflation down, keeping some investors on the edge.
Meanwhile, market players struggled to digest negative news coming from China, as the country keeps reporting record coronavirus contagions in Beijing and other big cities. The concerns about stricter lockdowns and the interruption of global shipments exerted bearish pressure on equity markets.
On the Eurozone front, the data released on Monday showed a bigger-than-expected increase in Industrial Production. The Gross Domestic Product (GDP) data today will also be important as the economy is facing the turbulence of soaring inflation, energy crisis, and supply chain bottlenecks due to Russia-Ukraine tensions.
The benchmarks, S&P 500 and Dow Jones Industrial Average both retreated lower on Monday as the S&P 500 snapped a two-day rally and treasury yields climbed. The S&P 500 was down 0.9% on a daily basis and the Dow Jones Industrial Average also dropped slightly with a 0.6% loss for the day.
Ten out of eleven sectors in the S&P 500 stayed in negative territory as the Real Estate sector and the Consumer Discretionary sector are the worst performing among all groups, losing 2.65% and 1.71%, respectively. The Nasdaq 100 meanwhile dropped the most with a 1.0% loss on Monday and the MSCI World index was up 1.8% for the day.
Main Pairs Movement
The US dollar advanced higher on Monday, regaining upside momentum and enjoyed some temporal demand at the beginning of the week amid mixed market sentiment. The anxiety ahead of the US midterm elections is providing some support to the safe-haven greenback, but the upside is restricted due to rising odds for a slowdown in the pace of rate hikes by the Federal Reserve (Fed). Fed Vice Chair Lael Brainard also supported the view of reducing the pace of policy tightening.
GBP/USD retreated lower on Monday with a 0.63% loss after the cable faced barricades around the 1.1800 level and dropped towards 1.1750 ahead of UK Employment/Autumn Statement. On the UK front, the contents of the UK Autumn Budget Statement from Chancellor Jeremy Hunt will be watched closely by investors. Meanwhile, EUR/USD remained under pressure and struggle around the 1.0330 area amid a stronger US dollar across the board. The pair was down almost 0.20% for the day.
Gold was nearly unchanged with a 0.01% gain for the day after climbing higher to a fresh three-month high around the $1,774 mark during the US session, as the yellow metal continues to garner demand as investors expect the Fed would ease off on a big interest rate hike.
Meanwhile, WTI Oil declined sharply with a 3.47% loss for the day amid negative Chinese news.
Economic Data
| Currency | Data | Time (GMT + 8) | Forecast |
| JPY | GDP (QoQ) (Q3) | 07:50 | 0.3% |
| AUD | RBA Meeting Minutes | 08:30 | |
| CNY | Industrial Production (YoY) (Oct) | 10:00 | 5.2% |
| GBP | Average Earnings Index +Bonus (Sep) | 15:00 | 5.9% |
| GBP | Claimant Count Change (Oct) | 15:00 | |
| EUR | German ZEW Economic Sentiment (Nov) | 18:00 | -50.0 |
| USD | PPI (MoM) (Oct) | 21:30 | 0.4% |
