Early Morning Call: equity markets rally after NFPs, China further reopening while USD tumbles
The FTSE 100 is at over four-year highs while the DAX and CAC nine- and 10-month highs respectively. Wall Street and Asia also saw gains.
Equity market overview
Equity markets started the week in positive territory in the APAC region, following the lead of US markets, and were boosted by the further reopening of China borders.
We also learned over the weekend that Jack Ma has given up control of Ant Group. Shares of listed Chinese companies that count Ant Group as a major shareholder rose. Alibaba was up 7%. The Japan Stock Exchange was closed.
Indices in Europe also rise at the open this morning, as the FTSE 100 climbs to a four-and-a-half year highs.
In Germany, industrial production rose by 0.2% in November month-on-month (MoM), after a 0.1% decline the previous month. and better than the 0.1% anticipated by economists.
Later this morning, the eurozone unemployment rate is expected to remain at 6.5% for the month of November.
The US created more jobs than anticipated. Friday's non-farm payrolls (NFP) data revealed 223,000 jobs were created in December, and the unemployment rate fell to 3.5%, from 3.6% the previous month. As a result the dollar fell to a one-week low against the euro, and to two-and-a-half week lows against the British pound.
Later this week, consumer price index (CPI) will be the next test for the greenback. The market expects US CPI growth to have cooled in December, to 6.5% year-on-year (YoY), after a 7.1% rise in November. The expected fall is partly driven by a drop in energy prices. In December gasoline prices fell by 13%.
But cooling down is expected to be broader based. Core CPI, which excludes food and energy components, is forecast at 5.7% in December YoY, after 6% the previous month.
Corporate overview
On the corporate agenda in the UK it's all about how consumer-facing businesses have been faring over Christmas.
Both Greggs and, to a greater degree, Next plc last week produced surprisingly good numbers.
This week we have a broad selection of trading opportunities across the retail sector. On Wednesday, Sainsbury's and Topps Tiles will report on their trading during the last few weeks of 2022, followed on Thursday by Tesco, ASOS, Halfords and Marks & Spencer.
In the US, earnings season will officially start on Friday with quarterly reports from JPMorgan, Citigroup, Bank of America and Wells Fargo.
Outside the banking sector, the market also awaits reports from UnitedHealth and Delta Air Lines.
Goldman Sachs is meanwhile set to start cutting around 3,200 jobs - about 6.5% of its workforce - from Wednesday, according to Bloomberg citing two sources familiar with the matter. Goldman Sachs declined to comment.
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