Recent economic data has been robust, which is giving the Fed headache to tone down monetary tightening policies such as a possible quicker pause in interest rate hikes. This has sent major indices on a downward spiral.
Our favourite Russell was hit the hardest, followed by Nasdaq, which fell 1.9%. This is despite positive news from China which had indicated plans to remove some Covid-19 measures as it starts to tone down part of its Covid-19 policy.
Investors also expect the Fed to increase the interest rate by 0.50%. Still, there is growing concern that the Fed might need to let the rate stay longer and higher than anticipated, given that yesterday’s Service PMI and Friday’s job report point to a potential inflation tailwind.
🎢Oil prices firmer🗽
The commodity has been the highlight after OPEC announced a plan over the weekend to keep their current output target unchanged. This also comes as the Group of Seven countries is also enforcing a price cap on Russian crude oil at $60 per barrel.
The impact is uncertain though the aim is to limit the gain from these exports, often seen as a revenue stream to fund the Ukraine war. A stable oil price will be beneficial for a declining inflation narrative.
📮What’s on the menu today?📖
There isn’t much data for the day, and market participants will be eyeing the upcoming CPI data instead.
It is 6 December, Tuesday, at 8.50 am in Singapore and 7.50 pm in New York. Pika World wishes everyone a splendid trading week!
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