US Stocks Rally Ahead of Key Data – Nasdaq up 0.9%
US equity markets pushed higher again overnight, with the Dow Jones finishing marginally stronger by 0.04% at 50,135. Tech stocks saw a much better day; the S&P 500 rose 0.47% to 6,964, while the Nasdaq outperformed with a 0.90% advance to close at 23,238, as investors remain cautiously optimistic ahead of key US employment and inflation data due later this week. Treasury yields edged lower, with the 2-year yield falling 1.3 basis points to 3.485% and the 10-year easing 0.4 basis points to 4.202%, suggesting some positioning ahead of the upcoming data releases, while the US dollar came under notable pressure, the Dollar Index declining 0.83% to 96.86 and losing ground against most major counterparts. Commodity markets were firmer. Brent crude rose 1.56% to $69.11, while WTI gained 1.37% to $64.42, as traders continued to monitor developments surrounding the ongoing US–Iran dispute. In precious metals, gold rallied 1.88% to $5,057.80, supported by softer yields and a weaker US dollar backdrop.
Oil Remains Volatile as Geopolitics Weighs
Oil prices have remained volatile over the last few weeks, as geopolitics has led to some sharp moves in both directions. These moves may have been overshadowed by much heftier moves in precious metals, but for traders looking at fundamentals, at least the moves in oil have made sense, whereas precious metal moves have been hugely distorted by other factors. The main flashpoint that is moving the market at the moment is clearly the continued dispute between the US and Iran, and oil has been moving directly with updates on that issue in the last few weeks. Escalations have seen moves higher, while updates indicating fresh talks, or a deal or solution, have seen those moves reversed. We are back near the upper end of the recent ranges for both Brent and WTI, and another step towards conciliation could see ‘black gold’ drop back into the range, while further escalation, which probably means military action, could see breaks to the topside.
US Data Kicks Off Today
Looking ahead, the first two trading sessions are relatively light on scheduled events; however, the US data calendar begins in earnest today during the New York session. Once again, traders are expecting volatility to remain high after more outsize moves in the market yesterday, especially in FX. Commodities also saw decent volatility, although notably lower than that which we have seen in the last couple of weeks. The New York session sees the release of the latest Retail Sales (exp +0.4% m/m), Core Retail Sales (exp +0.3% m/m), and the Employment Cost Index figures (exp +0.8% q/q). We also hear from Fed members Beth Hammack and Lorie Logan later in the day.
