US Stocks Drive to Fresh Record Levels – S&P up 0.5%
The three major US stock indices all finished off the quarter in style yesterday as the Nasdaq and S&P again hit fresh record closing levels. Trade deal optimism and anticipated Fed rate cuts helped to propel the indices higher. The Dow added 0.63%, the S&P 0.52%, and the Nasdaq 0.47%. The dollar dropped further south against the majors, the DXY down 0.42% to 96.78, whilst treasury yields also fell, the 2-year off 2.9 basis points to 3.719% and the 10-year down 4.9 basis points to 4.228%. Oil prices drifted lower as Middle East tensions eased further, Brent down 0.36% to $66.57 and WTI down 0.89% to $64.97 a barrel. Gold rose on the back of the weaker dollar, up 0.87% on the day to $3,302.55.
Central Bankers Chat in Focus Today
Investors are expecting to see some strong moves in markets today with the unusual occurrence of several key central bankers sitting down for a quiet chat. The ECB’s central bank forum will see the heads of the European Central Bank, the Bank of England, the Bank of Japan, and the Federal Reserve all participate in a policy panel. Traders will not only be focusing on any hints on rate moves and timing but also on where the banks are positioned with regard to the uncertainty in markets created by the US administration’s tariff plans. As always, Fed Chair Jerome Powell will probably have the largest lens on what he says; however, we could see bigger moves in other products if some of the other participants introduce anything new to the market. FX markets, in particular, could see a big jump in volatility, especially if there are any updates that point to fresh interest rate differential opportunities.
Market Volatility to Pick Up Today
Market sentiment has driven higher over the last few days as the conflict in the Middle East has died down significantly and US traders have priced in higher probabilities of rate cuts in the world’s largest economy. Market focus will move to fundamentals as the week progresses, with key US jobs data out in the next few days and the ECB’s central bank forum taking place in Portugal over the next couple of days. There is little on the calendar in the Asian session today; however, updates will pick up after the European open. EU CPI numbers are due out, with an expected 2.0% increase for the headline number and a 2.3% increase for the core data, but traders are expecting to see bigger moves across various markets once attention moves south to Sintra. Central bank heavyweight heads Christine Lagarde (ECB), Jerome Powell (Fed), Andrew Bailey (BOE), and Kazuo Ueda (BOJ) are all taking part in a panel discussion entitled “Policy Panel,” and updates with regard to rate moves are expected. The New York session sees this week’s US data drop kick off in earnest with the JOLTS Job Openings (exp. 7.32 mio) and the ISM Manufacturing PMI (exp. 48.8) numbers both due out early in the session.
