The stock market is showing modest gains as investors brace themselves for a week filled with potentially market-shifting announcements. Early Monday trading saw the S&P 500 climbing by 0.3%, following its strongest performance since November. The Dow Jones Industrial Average also saw an uptick of 108 points, while the Nasdaq composite surged by 0.4%. Tesla notably soared by 12%. Amazon and Apple are scheduled to release their latest earnings this week, alongside about a third of the companies listed in the S&P 500. Additionally, Wednesday will see the Federal Reserve unveiling its latest decision on interest rate policy, while Friday is marked for the government’s highly anticipated monthly jobs report.
In the international arena, global shares are trading higher on Monday, buoyed by the positive momentum that concluded the previous week on Wall Street. All eyes, however, remain fixed on the upcoming Federal Reserve policy meeting later this week.
France’s CAC 40 opened trading with a 0.3% increase, reaching 8,109.22, while Germany’s DAX inched up by 0.2% to 18,198.89. The UK’s FTSE 100 also gained by 0.5% to reach 8,176.36. In the US, S&P 500 futures were up by 0.2% at 5,144.00, with Dow futures rising by 0.2% to 38,509.00.
In the Asia-Pacific region, Sydney’s S&P/ASX 200 surged by 0.8% to 7,637.40, and South Korea’s Kospi jumped by 1.2% to 2,687.44. Hong Kong’s Hang Seng edged up by 0.5% to 17,746.91, while the Shanghai Composite rose by 0.8% to 3,113.04. Trading in Tokyo remained closed due to the Showa Day holiday, marking the beginning of Japan’s Golden Week, a series of holidays extending through Monday.
Stephen Innes, managing partner at SPI Asset Management, expressed optimism about the market sentiment following last week’s tech-driven rally on Wall Street. He noted that while strong earnings reports have bolstered market confidence, the declining Japanese yen poses a potential risk factor.
Investors are closely monitoring the yen’s recent depreciation against major currencies, prompted by the Bank of Japan’s decision to maintain interest rates unchanged last Friday. Despite this anticipated move, the central bank’s seemingly unconcerned stance on the exchange rate has raised eyebrows. In currency trading on Monday, the US dollar initially rose to levels around 160 Japanese yen before experiencing a downturn, dropping as low as 155 yen. Speculation regarding market intervention by the Bank of Japan ensued, although official comments were not forthcoming.
A weak yen can benefit Japan’s exporters like Toyota Motor Corp. by increasing the value of their overseas earnings when repatriated into yen. However, over the long term, a weakened currency can hamper economic growth by reducing purchasing power and potential wage increases, particularly in a country like Japan, which heavily relies on energy imports.
Regarding US monetary policy, recent inflation data have led analysts to expect the Federal Reserve to maintain interest rates. Despite earlier hints at possible rate cuts, top Fed officials have signaled a willingness to keep rates steady to steer inflation towards the 2% target.
In energy markets, benchmark U.S. crude fell by 51 cents to $83.34 a barrel, while Brent crude, the international standard, lost 73 cents to $88.77 a barrel.
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