US Stocks Correct After Friday’s Rally – Dow down 0.8%
US stock indices fell in trading yesterday after Friday’s post-Jackson Hole rally as investors reassessed rate cut expectations and looked ahead to key inflation data and Nvidia earnings. The Dow fell 0.77% to 45,282, the S&P dropped 0.43% to 6,439, and the Nasdaq lost 0.22% to 21,449. The dollar reclaimed nearly all its lost ground from Friday, with the DXY rising 0.73% to 98.43 as Treasury yields pushed higher — the 2-year up 2.5 basis points to 3.721% and the 10-year up 2.1 basis points to 4.275%. Oil prices pushed higher as traders priced in a much longer peace process in Ukraine after strikes on Russian oilfields, with Brent up 1.57% to $68.79 and WTI up 1.74% to $64.77. Gold was steady in recent ranges, dropping 0.18% to $3,371.86 on the stronger dollar.
Oil to Remain Volatile in the Weeks Ahead
Oil prices have been very volatile over recent weeks as both geopolitical and fundamental influences have moved it one way and then the other, and that volatility looks set to remain for the medium term. Much depends on the ongoing discussions between a variety of parties on the Russia-Ukraine war, and hopes that a swift ceasefire was coming — which saw good moves lower — have been dashed over the last week, as any deal that President Trump was looking to broker does not seem to suit either side. OPEC+ has been substantially reducing production cuts, which has put pressure on the market, but geopolitical updates and US inventory numbers have led to some good rallies. Overall, if we see signs of a settlement of some kind in Ukraine, then this, combined with increased production from OPEC and the end of the “summer US driving season,” should see the trend move towards the downside in the longer term.
Calendar Picks Up in the US Session Today
It is another relatively quiet day on the economic event calendar today; however, things do look busier in the New York session than in the first two of the day. There will be some interest in the Australian markets early on with the Reserve Bank of Australia’s Monetary Policy Meeting Minutes due, as traders look to see if more cuts are in the offing. There is nothing of note due in the London session, but we do have some potentially market-moving data once New York kicks off. Durable Goods (exp -3.8% m/m) and Core Durable Goods (exp +0.2% m/m) numbers are out early in the day, followed by the CB Consumer Confidence (exp 96.4) and Richmond Manufacturing Index (exp -11) data a couple of hours later. Canadian markets will come into focus towards the end of the session when Bank of Canada Governor Tiff Macklem speaks at an event in Mexico, and traders are expecting moves in the loonie on any new updates.
