In another volatile week for global market sentiment, Wall Street[1] managed to close in the green, but not without giving up most gains. Nasdaq[2] 100, S&P 500[3] and Dow Jones futures finished +1.41%, +1.39% and +0.99% respectively. This helped the VIX market ‘fear gauge’ drop 16%. European equities were mixed with Asia-Pacific markets faring better.
Fedspeak that helped cool odds of 5 rate hike bets this year earlier in the week was somewhat offset by January’s US jobs report. The world’s largest economy unexpectedly added 467k positions versus 125k seen as average hourly earnings surged 5.7% y/y versus 5.2% anticipated. Mixed earnings between key companies Meta and Amazon also resulted in wild market swings.
The US Dollar[4] succumbed to selling pressure, although some losses were trimmed on Friday thanks to NFPs[5]. The Euro[6] and British Pound[7] were notable standouts following more hawkish interest rate decisions from the ECB and BoE respectively. Demand for EUR and GBP likely sapped some appeal from USD[8]. Crude oil prices[9] hit a 7-year high despite OPEC+ output hikes.
Key event risk next week will likely be January’s US CPI report on Thursday. Headline inflation is expected at 7.3% y/y, which means prices will continue rising at the fastest pace in 40 years. Another strong print, especially following NFPs, could reinforce five 2022 Fed rate hike bets as well as a 50-bps push from the central bank in March.
Outside of CPI, preliminary UK fourth-quarter GDP will cross the wires on Friday. While earnings season is slowly dying down, there are a few key companies to watch out for. Disney, Twitter, Pfizer and Uber will be key highlights. For
