After last Friday’s volatile trading, equities are off to a slow start on Monday as data was lighter across all trading sessions. Uncertainty is still imminent in the markets since the conflict in Ukraine hasn’t been completely resolved and a fresh wave of risk aversion was spurred by ongoing investigations on the missing Malaysian Airlines plane.
This is not unusual for the Monday following the NFP release in the US. The recent report showed a stronger than expected figure of 175,000 versus the estimate of only 151,000. On top of that, the previous two months enjoyed upward revisions in the employment figures. However, the jobless rate climbed from 6.6% to 6.7% as more Americans stayed in the labor force to look for work.
Equity Market Forecast
US equities closed off the previous week mostly positive, spurred by the rebound in hiring. DJIA closed with a 0.8% gain while S&P500 logged in close to a 1% increase for the week. Commodities, on the other hand, chalked up small losses as traders let go of their precious metal holdings to pursue riskier assets such as equities and futures.
However, analysts speculate that the rebound in stocks may merely be a quick market correction. After all, there are still plenty of uncertainties in the US economy, as the rebound in hiring doesn’t guarantee a full recovery in the US labor market. Fed Chairperson Janet Yellen did clarify that the Fed is likely to keep interest rates low and monetary policy unchanged even if the jobless rate does dip below 6.5%. They will be looking at other labor and economic indicators to gauge whether the US economy is really recovering or not.
In today’s trading sessions, data is light so there’s a good chance of quiet trading or range-bound market behavior unless any events that can impact risk sentiment take place. There are no reports lined up from the US economy today, although some technical analysts warned of a potential bubble forming among biotech stocks.
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