US Stocks Jump Again into Quarter End – Dow up 1.2%
The usual 2024 service was resumed again yesterday on Wall Street after a few ‘off’ days and the major US stock indices powered higher into the end of quarter. The Dow jumped 1.22% leaving the S&P and Nasdaq lagging, they finished the day up 0.86% and 0.51% respectively. There had been a fear that end of quarter readjustments of portfolio allocations would lead to a significant correction, but they seem unfounded at this stage. Currencies were once again relatively quiet, although UsdJpy took a hit as talk of intervention hit the market. US treasury yields eased lower again, the 2-year down 2.1 basis points to 4.577% and the 10-year off 3.8 basis points to 4.196%. Oil prices also dipped after a surprise increase in US inventories, Brent dropping 0.2% to $86.09 per barrel and WTI losing 0.3%, down to $81.35 per barrel. Gold drove higher again, gaining 0.5% on the day to settle near the $2,190 level.
Intervention Fears Stalk UsdJpy Bulls
The Yen hit its lowest level against the dollar since 1990 yesterday and news that Japanese authorities were holding a meeting late in the Asian trading session led to a swift correction in the currency pair. The Bank of Japan, the Ministry of Finance and Japan’s Financial Services Agency all got together late in the day with Masato Kanda of the MOF then advising that they “won’t rule out any steps to respond to disorderly FX moves”. Old campaigners in the FX market have been here many times before, because let’s be honest the market hasn’t been disorderly at all, and interest rate differentials are pointing to more upside for the pair at the moment. But what we could see over the course of the next few days is some very volatile movements in the market brought about by that very intervention. The smart money is on the market taking out strong options and stop loss interest at the 152 level before the Japanese authorities come in and hit the market, either through real intervention or excessive ‘jawboning.’ If this were to occur in thin holiday liquidity in the next few days, expect the moves to be very disorderly indeed!
More Data to Hit the Market Ahead of Holiday Trading
Australian markets are once again in focus early in the day as Retail Sales numbers are set to be released early in the day. Expectation is for a 0.4% month-on-month increase but anything near last month’s 1.1% increase should see the Aussie move back higher into the range. The London session is again relatively quiet, with lower-level data due for release, but the New York session looks set to be a busy one again. It’s the last full trading day of the quarter which should keep Wall Street busy and both Canadian and US GDP numbers are scheduled for release early in the session along with the weekly US unemployment claims data. Later in the day the Pending Homes and the University of Michigan Consumer Sentiment updates are also due out. Holiday trading conditions are set to kick in this afternoon as many centres are shut tomorrow for Good Friday celebrations and moves could become exacerbated as liquidity levels fall.
