US Markets Power Higher into the Weekend – Nasdaq up 1%
US stock markets drove higher again on Friday, with the Nasdaq closing at another record level into the weekend. The Dow added 0.47% to move up to 44,175, the S&P gained 0.78% to 6,389, while the Nasdaq pushed up 0.98% to 21,450. Treasury yields pushed higher as investors looked ahead to key inflation numbers this week, with the 2-year up 3.4 basis points to 3.762% and the 10-year up 3.3 basis points to 4.283%. The dollar traded in familiar ranges against the majors, the DXY adding 0.14% to move back to 98.27. Oil prices were steady near recent multi-week lows after news hit the market that Presidents Trump and Putin are likely to meet on 15 August. Brent closed up 0.24% at $66.59, and WTI edged just 0.02% higher to finish at $63.88. Gold also remained steady despite talk of US tariffs being placed on the precious metal, closing up just 0.04% at $3,396.60 an ounce.
More Interest Rate Cuts This Week
Traders are anticipating another key central bank to cut interest rates this week, with the Reserve Bank of Australia expected to follow the Bank of England’s move last week and reduce rates by 25 basis points. It looks like being an easier call for Australian markets than the UK, which is still battling sticky inflation; however, the RBA shocked markets by keeping rates on hold last time out, and only some outliers in the market feel they can hold off this time. The market is nearly 100% priced in that they will cut tomorrow, and a shock would send the Aussie dollar north at a high rate. Traders are expecting that the real volatility around the event will come from the forward guidance in the statements and from what we hear from Governor Michelle Bullock in the subsequent press conference, with talk of more cuts to come likely to lead to good Aussie dollar selling.
Quiet Calendar Day to Start a Big Week
The macroeconomic calendar is relatively quiet today ahead of what could be a pivotal week for financial markets, with key US inflation data due to drop along with an anticipated meeting between Russian and US Presidents Putin and Trump. There was some Chinese inflation data out over the weekend — CPI data slightly beat expectations, while PPI fell lower — however, there has been little impact on the Asian open this morning. Japanese markets are closed for a holiday today, which may affect liquidity in the first session of the day, and New Loans data (exp. 360 bio) is due out of China. Apart from that, there is little else to move the dial on the calendar for the rest of the day. Traders are expecting range-bound conditions but will be keeping a close eye on newswires for any geopolitical updates, especially with regard to US–Russia talks.
