Markets are on alert for rate rises in both the eurozone and the United States

Wall Street shares finished broadly lower yesterday, while European stocks rose following five straight weeks of declines and European bond yields soared on speculation of monetary tightening. 

Markets are on alert for rate rises in both the eurozone and the United States after the ECB last week was considered to have adopted a more hawkish tone. The United States reported stronger-than-expected jobs and earnings data. European Central Bank President Christine Lagarde yesterday calmed some of those jitters, saying there were no signs that measurable monetary policy tightening would be required. 

Economic Calendar

Major Wall Street stock indexes were mixed throughout the session on Monday before ending down as markets digested mixed quarterly results from mega-caps Amazon.com Inc. and Facebook owner Meta Platforms. The market's inability to rally on Friday's strong payroll data, and generally poor stock reactions to Q4 results despite healthy earnings delivery, illustrate the overly bearish market sentiment at the moment.

Dow Jones Industrial Average

The Dow Jones Industrial Average gained 0.00%. The best performers of the session on the Dow Jones Industrial Average were Boeing Co, which rose 2.65% or 5.47 points to trade at 211.92 at the close. Meanwhile, Chevron Corp added 1.97% or 2.67 points to end at 138.55 and American Express Company was up 1.09% or 2.02 points to 187.87 in late trade. The worst performers of the session were Microsoft Corporation, which fell 1.63% or 4.99 points to trade at 300.95 at the close. Merck & Company Inc. declined 1.25% or 0.98 points to end at 77.58 and Dow Inc. was down 1.14% or 0.69 points to 59.91.

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NASDAQ 100

The NASDAQ index declined 0.58%. The top performers on the NASDAQ Composite were Kaival Brands Innovations Group Inc. which rose 51.40% to 1.620, Origin Agritech Ltd which was up 34.81% to settle at 6.390 and Luokung Technology Corp which gained 24.31% to close at 0.630. The worst performers were Dermata Therapeutics Inc. which was down 34.68% to 1.45 in late trade, Cerence Inc. which lost 31.41% to settle at 43.61 and Nisun International Enterprise Development Group Co Ltd which was down 24.83% to 1.09 at the close.

Oil

Oil slipped to around $92 a barrel today ahead of the resumption of indirect talks between the United States and Iran, which may revive a nuclear agreement that could eventually allow more oil exports from the OPEC producer. 

A deal could allow over 1 million barrels per day of Iranian oil, equal to over 1% of global supply, back onto the market. The talks over the nuclear deal will resume today in Vienna. U.S crude fell 52 cents, or 0.6%, at $90.80. Eight rounds of indirect talks between Tehran and Washington since April have yet to result in an agreement on resuming the 2015 nuclear deal. 

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Differences remain about the speed and scope of lifting sanctions on Tehran. Oil also came under pressure from the prospect of an increase in U.S crude inventories. Analysts estimate inventories have risen by 700,000 barrels in the week to Feb. 4. The first of this week's two supply reports, from the API, is out will be out today.

Precious and Base Metals

Gold prices climbed to a more than one-week high yesterday, supported by inflation worries and lingering geopolitical risks, as markets awaited key U.S inflation data for cues on the Federal Reserve's interest rate hike trajectory. Spot gold rose 0.7% to $1,820.23 per ounce, after hitting its highest level since Jan. 27 at $1,820.96 earlier in the session. 

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There's a bit more flight-to-safety buying in the gold market. The main concern right now is where are we headed with inflation and how aggressive the Fed will be. Benchmark 10-year U.S. Treasury yields hovered near their highest levels since December 2019 after an upbeat U.S. employment report on Friday. U.S. inflation figures for January are due on Thursday, with markets now pricing in a one-in-three chance the Fed might hike by a full 50 basis points in March. 

Although gold is considered a hedge against higher inflation and a safe store of value in times of uncertainty, higher rates raise the opportunity cost of holding non-yielding bullion. Russia-Ukraine tensions are also on the back of everyone's minds. White House national security adviser Jake Sullivan said on Sunday that Russia could invade Ukraine within days or weeks but might still opt for a diplomatic path. 

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Gold and silver prices were boosted in part by a U.S. dollar index that has dropped sharply from its late-January high. Meanwhile, speculators cut their net long COMEX gold position in the week to Feb. 1, data showed on Friday. Among other precious metals, silver jumped 2.4% to $23.02 per ounce, platinum declined 0.4% to $1,020.02, and palladium fell 1% to $2,261.51.

Traditional Agricultures

Soybean edged lower, easing from an eight-month high hit in the previous session, ahead of a U.S Department of Agriculture supply and demand report but concerns over dry weather conditions in South America limited losses. Corn and wheat futures also lost ground, shedding some of the previous session's gains. The market continues to revise its assessment of South American crops. The market is also seeing plenty of evidence of export demand from the U.S. to bolster that bullishness. Markets are positioning ahead of world grain and oilseed supply and demand forecasts from the USDA on Wednesday.

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