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.

Three central banks. Three rate hikes. Last week was certainly eventful. The Fed are evidently slowing the pace of policy tightening; the central bank increased its benchmark rate by 25 basis points—this was the smallest rate hike since March last year. The BoE and the ECB, as expected, also raised rates by 50 basis points.

Powell’s subsequent presser attempted to echo caution, though his remarks appeared to be largely dismissed by the markets: stocks and bonds responded positively. Therefore, Powell’s participation in a moderated discussion at the Economic Club tomorrow will be a noteworthy watch.

Last week also wrapped up with a bumper employment release. Non-farm payrolls increased by 517,000 in January, a huge gain for the jobs market that comfortably beat the median forecast of 185,000. Additionally, US unemployment dropped to 3.4% and wage growth shows signs of slowing at 0.3% month over month. The release weighed on US equities.

Despite Friday’s dip, January was a solid month for US equity indices. The Dow Jones Industrial Average wrapped up 2.8% higher, the S&P 500 added 6.2% and the Nasdaq 100 climbed 10.6%. Year-to-Date S&P 500 sector performance is equally impressive, with XLC (communication services) leading the way at 21.3%, followed by XLY (consumer discretionary) at 17.2%.

Markets Today

Overnight highlights witnessed Asia-Pac equity indexes finish mixed; the Nikkei 225 added 0.7%, South Korea’s KOSPI fell 1.7% and Australia’s ASX 200 dropped 0.3%. However, it’s red across the board for European indices in early trading today. Both CAC and the Euro Stoxx 50 are down more than 1.0%, with the FTSE 100 and the DAX down by nearly 0.8%.

Today’s risk events are thin in terms of macro statistics, with not much likely to move the financial needle. ECB’s President Lagarde, nevertheless, will take some of the limelight today at 6:00 pm GMT, perhaps increasing market volatility.

Technically, keep an eye on the EUR/USD, which recently touched gloves with key weekly resistance at $1.0888 and shaped a shooting star candlestick formation. This is considered a bearish signal. The S&P 500 is another key technical watch as the benchmark index tackles weekly resistance coming in at 4,177 after rupturing a weekly trendline resistance, drawn from the high 4,818.

Tier-1 Economic Data in Focus:

N/A

Currency Markets as of 9:25 am GMT:

EUR/USD: $1.0787 -0.06%

GBP/USD: $1.2062 +0.09%

AUD/USD: $0.6924 +0.04%

USD/JPY: ¥131.86 +0.52%

NZD/USD: $0.6319 -0.21%

USD/CAD: C$1.3411 +0.12%

USD/CHF CHF0.9234 -0.24%