The major indexes of the U.S. stock market, the S&P 500 (SPX) and Nasdaq 100 (NDX), closed 0.52% and 1.33% higher respectively on Friday. A series of strong earnings reports continued to restore the market’s confidence in technology stocks after the industry was beaten down last month.
Moreover, another boost to investor confidence came in the form of a positive U.S. jobs report on Friday. According to the report, the labor market was unexpectedly resilient in January despite the rising cases of Omicron, putting more pressure on the Fed to increase its interest rates. Notably, a 4% rise in the unemployment rate was met by a 0.7% rise in the hourly wage rate.
However, after closing the best week so far this year, U.S. index futures slid in the early hours on Monday. The Dow Jones Industrial Average (DJIA) futures contracts shed 85 points or 0.24%, while the S&P 500 and NASDAQ 100 futures were down 0.22% and 0.18% respectively.
European Markets in a Dilemma
On the other side of the world, the mixed decisions of two major banks of Europe continued to keep the European markets choppy on Monday. The Stoxx 600 index traded 0.1% below the flatline in early trading, while retail stocks gained 0.8% and oil and gas dipped 0.4%.
Last week, the European Central Bank (ECB) announced that key interest rates will remain as they are, despite record levels of inflation. The ECB is banking on its belief that inflation, which has been rising steadily for a few months now, will fall back over the course of this year.
However, market experts are wary about this lack of action by the ECB, worrying that the prolonged inflation might stunt the post-COVID-19 economic recovery progress.
On the other hand, the U.K. tightened its policies to contain the rising inflation, with the Bank of England raising the interest rate by 50 basis points. This was the second hike in 3 months. The first inflation-control interest rate hike was made in December. However, this was not very effective, as high energy costs and persistent supply chain issues pushed consumer prices up harder than the interest rate hike could resist.
Apart from this, the Bank of England also announced that it expects inflation to reach a peak of 7.25% in April, as opposed to the 6% projected earlier.
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