Australian Market

Australia’s S&P/ASX 200 gave up 0.2% amid weakness in the heavyweight financial and materials sectors. Economists expect Australia’s central bank to raise interest rates next week. Economic data due this week including on retail sales may give a clue about subsequent policy.

US Market 

U.S. stocks fell, with investors growing cautious at the start of a bumper week of central-bank meetings and corporate earnings. The S&P 500 was down 1.3%, while the Dow Jones Industrial Average fell about 0.8%. The Nasdaq Composite declined nearly 2%. The Federal Reserve, under Chairman Jerome Powell, is determined to tame inflation, and many believe the Fed is unlikely to quickly begin lowering interest rates as it has done in the past. Some investors worry that sustained high rates could drag the economy into recession.

“The market has had a flying couple of weeks. But as we get closer to the Fed meeting, cautiousness is something that is certainly going to creep in,” said Seema Shah, chief global strategist at Principal Asset Management. “We will likely see Powell re-emphasizing that they are not at the end yet.”

Commodities

Gold futures settled lower after clinching a sixth straight week of gains – the longest such winning streak for a most-active contract since August 2020, according to Dow Jones Market Data. Gold futures for April delivery, which is now the most actively traded contract, fell 0.3% to settle at $1,939.20 an ounce on Comex. Precious metals analysts blamed gold’s pullback on profit-taking following an epic bull run that sent the yellow metal to a nine-month high.

Oil Futures

Oil futures settled lower, extending declines from last week as investors awaited expected rate hikes by the Fed and other central banks. The outcome of an OPEC+ committee meeting and the Fed’s monetary-policy decision will both come on Wednesday, while the European Union’s ban on imports of Russian oil products will begin on Feb. 5.  

West Texas Intermediate crude for March delivery fell 2.2% to settle at $77.98 a barrel on the New York Mercantile Exchange. March Brent crude lost 2% at $84.90 a barrel on ICE Futures Europe. “A hawkish sentiment for potential future rate hikes will give weakness to crude and refined products across the board,” analysts on the Kansas City energy team at StoneX wrote.

Forex

Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.0912 to lows near US$1.0838 and was near US$1.0845 at the US close. The Aussie dollar dipped from highs near US70.96 cents to lows near US70.51 cents and was near US70.60 cents at the US close. And the Japanese yen eased from near 129.41 yen per US dollar to
around JPY130.55 and was near JPY130.45 at the US close.

European Markets

European sharemarkets closed mostly lower on Monday after data showed that Spain’s annual consumer prices rose by a higher-than-expected 5.8% in January, the first increase in six months, due to higher fuel prices (survey: 5%). Also dampening sentiment was a contraction in Germany’s gross domestic product (GDP), which unexpectedly fell 0.2% in the December quarter (survey: flat), heightening concerns about a recession. The lift in eurozone bond yields weighed on rate-sensitive stocks with technology sector shares down 1.7%. The continent-wide FTSEurofirst 300 index slid 0.2%. But the UK FTSE 100 index added 0.3% after consumer goods giant Unilever (+1.3%) announced a new chief executive officer.

Asian Markets

Earlier Monday, Chinese shares ended higher in the first trading session after the Lunar New Year break, with investor sentiment buoyed by robust consumption data during the holiday, as well as strong expectations for China’s economic recovery in 2023. The Shanghai Composite Index erased some of its opening gains, but was still up 0.1%, the Shenzhen Composite Index rose 1.2% and the ChiNext Price Index added 1.1%.

Hong Kong’s Hang Seng Index, however, lost 2.7% as tech shares weighed. The Hang Seng Tech Index declined 4.8%. Japan’s Nikkei Stock Average edged 0.2% higher as gains in land transport, chemicals and electronics stocks outweighed losses in other sectors such as iron and steel.