The FP Markets research team produce First Light News around the European open, ensuring traders and investors have the news needed to begin their day.

Good morning.

Major US equity indices traded lower on Monday. The Dow Jones Industrial Average fell 0.1%, the S&P 500 dropped 0.6% and the Nasdaq 100 fell 0.9%. It was also largely red across the S&P 500 sectors; defensive sectors, however, fared better: utilities added 0.9% and consumer staples eked out a marginal gain of 0.1%. Major laggards on the session were technology (-1.2%), communication (-1.2%) and materials (-1.1%).

European equity indexes also finished the session lower. The DAX 40 fell 0.8%, the CAC 40 declined 1.3% and the FTSE 100 was down 0.8%.

It was relatively subdued across the currency space in recent trading, though we did see the US dollar, according to the US Dollar Index, pencil in a reasonably strong performance to land the buck at the underside of its 50-day simple moving average around 103.58.

In terms of US rates, the benchmark US 10-year Treasury yield advanced 12 basis points and touched gloves with a four-week top at around 3.6%.

Markets Today

Overnight, the Reserve Bank of Australia (RBA) increased its Cash Rate by 25 basis points, as expected. This marks the ninth consecutive time that the central bank has raised its benchmark rate to control inflation. According to the RBA’s statement, the board anticipates additional rate increases will be needed to ‘ensure that inflation returns to target and that this period of high inflation is only temporary’. The immediate aftermath witnessed the Australian dollar advance versus its G10 peers and remains higher across the board as we step into European/London hours. The ASX200, however, plunged following the announcement, falling 0.5% in the space of five minutes.

Major Asia Pac equity indices concluded mixed; the Nikkei 225 ended flat, South Korea’s KOSPI added 0.6% and Australia’s ASX 200 dropped 0.5%. European equity indices also recently kicked off the session exhibiting a mixed tone; the FTSE 100 is higher by 0.4% while the Euro Stoxx 50 trades flat. The Dax and CAC are currently down by 0.2% and 0.1%, respectively.

Today’s main highlight in terms of the economic calendar is the Fed Chair Jerome Powell’s participation in a moderated discussion at the Economic Club at 5:40 pm GMT.

Finally, technical traders will note the EUR/USD continued to navigate lower terrain from weekly resistance at $1.0888 after shaping a shooting star candlestick formation. This is considered a bearish signal and implies the currency pair could be headed for daily support priced at $1.0602. The S&P 500 also remains a key technical watch, particularly daily support at 4,087.

Tier-1 Economic Data in Focus:

Fed Chair Jerome Powell Speaks at 5:40 pm GMT.

BoC Governor Macklem Speaks at 5:45 pm GMT.

Currency Markets as of 8:45 am GMT:

EUR/USD: $1.0712 -0.19%

GBP/USD: $1.2011 -0.08%

AUD/USD: $0.6920 +0.57%

USD/JPY: ¥132.09 -0.40%

NZD/USD: $0.6310 +0.10%

USD/CAD: C$1.3430 -0.10%

USD/CHF CHF0.9279 -0.05%