Markets week ahead: S&P 500, Nasdaq 100, USD, JPY, BoJ

Global market sentiment improved this past week across stock market exchanges around the world.

• On Wall Street, the S&P 500 and Nasdaq 100 gained +2.67% and 4.82%, respectively.
• Turning to Europe, the FTSE 100 and Dax 40 increased 1.88% and 3.26%, respectively.
• In the Asia-Pacific region, the Nikkei 225 and Hang Seng Index climbed 1.16% and 3.56%, respectively.

US inflation continued slowing in December, clocking in at 6.5% y/y versus 7.1% in November. Although, that was in line with expectations. While the energy component continued weakening, food and shelter costs remained elevated. Still, markets took this as more signs that the Federal Reserve will soon bring its hiking cycle to a halt.

Treasury yields declined, but the pace notably slowed compared to recent weeks. Meanwhile, the US dollar continued to weaken. The DXY dollar index closed at its lowest since June 2022. The best-performing major currencies were the Japanese yen, EURand Australian dollar Gold prices soared 2.93% in the best week since April 2022 as bond yields and USD weakened.

Turning to the week ahead, for once the Bank of Japan might be an interesting event for USD/JPY (大口）. That is because ever since the central bank unexpectedly adjusted monetary policy in December, there is rising speculation that more changes could be in store towards normalization. Japan will also be releasing December’s inflation gauge at the end of the week.

For USD/CAD and GBP/USD, Canada and the United Kingdom will be releasing CPI figures as well, respectively. Meanwhile, the Australian dollar will be paying close attention to Chinese GDP and another batch of local employment data. The earnings season is also gradually picking up. What else is in store for markets in the week ahead?

How markets performed – week of 1/09

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