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General Market Analysis 23/04/2024

Markets Rally as Middle East Tensions Ease – S&P 0.9% Higher 

Risk appetite returned to the market in trading yesterday as geopolitical concerns in the Middle East pulled back with both Israel and Iran advising that they do not want to escalate hostilities. The major US indices all jumped back after hard losses on Friday, the Dow gained 0.67%, the S&P 0.87%, and the Nasdaq finished up 1.11%. The dollar remained in relatively familiar trading ranges, although the UsdJpy remains in focus, hitting a 34-year high overnight against the greenback at 154.85. US Treasury yields saw little movement, the 2-year closing at 4.971% and the 10-year at 4.621%. Oil prices pulled back again, Brent losing 0.33% to $87 per barrel and WTI dropping 0.35% to trade at $82.85 per barrel. Gold saw much more volatility, experiencing its biggest 1-day drop in nearly 2 years as it fell 2.6%, trading around the $2,330 level at the start of the Asian session. 

Multiple Factors to Hit Markets this Week

It was an interesting start to the trading week yesterday as the ever-present focus on inflation data and its effect on rates took a step back and allowed geopolitics and company earnings data to dominate moves.  There is no doubt that the major quarterly earnings report due out this week will have a strong impact on US stocks, especially given the heavy weighting of the ‘Magnificent Seven’, however, expect the focus to swiftly move back to the Fed and rate cut expectations by the end of the week when the Core PCE Index data is due out. In addition to the US data, we also have a plethora of PMI numbers due out across multiple regions and CPI numbers out of Australia which will all have stronger influences on central banks than individual company numbers. Add to the above the potential for more geopolitical escalation in the Middle East and you have the recipe for a volatile few days ahead.  

PMI Data Dominates Economic Calendar Today 

Asian markets are set to start the day on the front foot after Wall Street posted gains on the first day of what could be a big week for investors. There is little on the calendar in the APAC session today, so expect that momentum to continue through the session, however, there is a heavy data hit in the latter two sessions of the day. We have the plethora of Flash Services and Manufacturing PMI numbers due out, with data set to come from, France, Germany, The Eurozone, the UK, and the US. New Home Sales and the Richmond Manufacturing Index numbers are also due out later in the New York session, and we have earnings numbers from Tesla, PepsiCo, and Visa to name but a few.  

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