Indian shares look set to open lower on Monday amid worries about inflation and interest-rate hikes as the May U.S. employment report underscored Fed Chairman Powell’s view of the labor market still being extraordinarily tight despite some moderation in wage growth.
The dollar climbed against the yen and Treasury yields stabilized after Cleveland Federal Reserve Bank President Loretta Mester said the Fed may need to raise rates through September unless there is “compelling” evidence that inflation has peaked.
The European Central Bank meets this week and is widely expected to aggressively tighten its stance with regard to interest rates.
Investors also await the RBI MPC outcome on June 8, with the central bank expected to announce another 40-basis points rate hike amid rising inflationary pressures in the economy.
Asian stocks were mixed this morning ahead of a key U.S. inflation report due this week. Oil prices jumped more than $2 in early Asian trade after Saudi Arabia raised prices sharply for its crude sales in July.
U.S. stocks fell sharply on Friday to close the week lower as a stronger-than-expected jobs report reversed any hopes that the Fed would consider a pause in rate hikes after the June/July increases.
Data showed that non-farm payroll employment jumped by 390,000 jobs in May after surging by an upwardly revised 436,000 jobs in April. Economists had expected employment to increase by about 325,000 jobs. The unemployment rate remained unchanged at 3.6 percent.
The tech-heavy Nasdaq Composite plunged as much as 2.5 percent, while the S&P 500 shed 1.6 percent and the Dow lost 1.1 percent.
European stocks finished slightly lower on Friday, with the U.K. markets closed for the Queen’s Platinum Jubilee celebrations.
The pan European Stoxx 600 slipped 0.3 percent as euro zone inflation numbers exceeded expectations and marked a seventh consecutive record high. The German DAX Index and the French CAC 40 Index both edged down by 0.2 percent.
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