Traders looked at the macroeconomic data from the US that came out last Friday, which suggests that the Federal Reserve could slow down the rate of tightening. Data released on Friday showed that the US economy added 223,000 jobs last month, which was more than the 200,000 jobs economists had predicted.
Federal Reserve officials agreed with these rumors, and the president of the San Francisco Fed, Mary Daly, said that either 50 or 25 basis points could be discussed at the next meeting. Raphael Bostic, head of the Federal Reserve bank in Atlanta, said that rates should go up to 5% or 5.25 %.
Also, China completely reopened its borders to international trade to get rid of the last of the harsh Covid rules, which had a big impact on China’s social policies over the last three years. Beijing is working hard to get ready for its reopening. Officials said they expected about 2 billion trips within China during the Lunar New Year holiday, which is almost twice as many as last year and 70% more than in 2019.
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Stocks were mostly down, however tech sector was able to somewhat hold the fall this time. The S&P 500 went down by 0.08%. The Dow Jones Industrial Average went down by 0.3%, while the tech heavy Nasdaq Composite went up by 0.65%.
Apple with 0.41%, Microsoft with 0.97%, and Alphabet (Google) with 0.78% led the tech stocks higher, while NVIDIA’s more than 5% rise helped semiconductor stocks.
Optimism does not feed the dollar
The Greenback went down on optimism-fuelled move away from the safe haven currency. The US dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.87% to 102.75, which is far below its peak of 114.745 on September 25th.
EUR/USD reached 1.0760 and held on to its almost 1% gains. GBP/USD trades at 1.2200, thanks to the general weakness of the US dollar. Aussie came close to 0.6950 and kept most of its big gains until the end of the day, closing a 0.58% in the green.
Commodities bet on China
After the worst week in a month to start the new year, crude prices went up just 1% on Monday. Bulls in the market bet that China’s reopening of its economy from strict Covid policies will increase oil consumption.
According to Reuters, China also gave out a second batch of crude import quotas for 2023. This brings the total for this year up by 20% compared to the same time last year.
In the first session of the second week of January, West Texas Intermediate, or WTI, crude went up 86 cents, or 1.2%, to $74.63. Session high was at $76.72. The price of US crude fell more than 8% last week, which was the biggest drop in a week since December 2nd.
Brent crude traded in London ended the day up $1.08, or 1.4%, at $79.65. Earlier in the day, it reached a high of $78.42. Brent also lost more than 8% last week, just like WTI.
Monday, the price of natural gas went up more than 5% as traders tried to make up for three weeks of losses that sent prices down more than 50% since the end of November. Henry Hub futures went up by as much as 11% during the day, but the market lost a lot of its momentum.
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Prescious metals closed the day mixed. Gold went up to $1,880.90 on Monday, which was its highest price since May 2022. Silver futures for March delivery lost 0.87% at the end of the day.