Markets Positive Ahead of Government Resumption – Dow up 0.7%
The Dow once again pushed to record levels overnight, rising 0.68% to close at 48,254, as investors looked ahead to the expected resolution of the US government’s longest-running shutdown within the next couple of days. The S&P 500 edged slightly higher by 0.06% to 6,850, while the Nasdaq slipped 0.26% to finish at 23,406, as some profit-taking emerged across the tech sector. In currency markets, the dollar traded in familiar ranges, finishing marginally firmer with the DXY up 0.03% at 99.48. Meanwhile, US Treasury yields declined as traders increasingly priced in potential rate cuts from the Federal Reserve. The 2-year yield fell by 2.3 basis points to 3.568%, while the 10-year dropped 4.7 basis points to 4.069%. Commodities were where the big moves occurred. Oil prices fell hard, Brent falling 3.73% to $62.73 and WTI down 4.21% to $58.48, after OPEC+ revised its long-term outlook and forecast that global oil supply will match demand by 2026 — a significant shift from its previous prediction of a supply deficit. Gold continued its strong run, gaining another 1.66% to trade at $4,195.39 at the New York close, extending its week-to-date advance to nearly 5%.
Gold Drives Higher Again – up 5% this Week
Gold has once again shone in financial markets over the last few days, with the world’s favourite precious metal gaining close to 5% from its low on Monday. Again, these moves appear to be hugely flow-driven, with little corresponding movement in other markets to justify their size. Some commentators are attributing the US government’s pending return, anticipated data resumption, and consequent Fed rate cuts to the move, and this may be a small factor, but the sheer size of the move would suggest that other factors are at play, as we saw in the big drive higher from early September. The metal is now just short of key trendline resistance on the daily chart, and if we see it smash through those levels in the next few sessions, we could see those all-time highs challenged again before the end of the month.
Busy Day Ahead for Traders
It is a busier day ahead on the economic calendar, with markets turning their attention to key data out of Australia and the UK. However, traders are expected to remain firmly focused on developments in Washington as the end of the government shutdown draws closer. The Asian session will see a strong focus on Australian markets, with crucial employment data due out. The Employment Change figure is expected to show a 20k increase for October, with the Unemployment Rate dropping 0.1% to 4.4%. The European session will again see a focus on UK markets, with GDP data due out. The month-on-month number is expected to come in flat, with the quarterly update expected at +0.2%, dropping from the previous +0.3%. There is little actually scheduled on the calendar in the New York session apart from the weekly Crude Oil Inventory data (exp. 1.0 mio barrels); however, traders are expecting government shutdown progress to ensure another lively session.
