Asian stocks and European equity futures edged higher on Monday as traders weighed in on the Fed’s hawkish comments.
A rise in Chinese stocks lifted the Asian stock indicator higher, while US futures faltered after another drop in the S&P 500 on Friday.
Chinese lenders, like the central bank, have left their benchmark lending rates unchanged.
The dollar index added 0.2% compared to most of its peers in the Group of 10. The gain came after the US and China failed to defuse tensions over the weekend. A senior Beijing diplomat called the American response to the downed balloon “hysterical” and his colleague Anthony Blinken called their entry into his country’s airspace “irresponsible.”
According to analysts, the US will continue to impose restrictions on China, especially in the technology sector, which traders and investors should take into account in long-term transactions not only with Chinese stocks but also global ones.
Also, the attention of market participants was focused on the changing prospects for interest rates. Interest rate hikes are expected to be a quarter point at the next two Fed meetings.
Fed officials emphasized the need for further rate hikes to curb inflation.
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However, the dollar’s strength will not last long once the Fed signals that it is happy with the rate level.
Fluctuations in currencies and bonds in Asia on Monday were imperceptible, partly due to the celebration of Presidents Day in the United States. On Monday, cash Treasuries were not traded.
Shares of Adani Total Gas Ltd., which lost more than three-quarters due to the latest news, fell to the limit on Monday.
The attention of traders and investors will also be focused this week on new messages from US consumers, as Walmart Inc. and Home Depot Inc. publish many retail earnings reports. Signs of economic resilience may give the Fed more reason to keep rates higher for a longer time.
In commodities, oil rose on hopes that a demand recovery in China will accelerate after the end of Covid Zero. Gold has changed little.
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