Stocks Push Higher After Inflation Data – Dow up 0.65%
US stock indices pushed higher in trading on Friday to close out the week in a positive mood after key US inflation data came in on expectations. The Core PCE data, the Fed’s favoured indicator, hit market expectations, increasing market pricing for another rate cut in October. The Dow gained 0.65% to 46,247, the S&P rallied 0.59% to 6,643, and the Nasdaq added 0.44% to move up to 22,484. The dollar took a hit after the data, the DXY closing down 0.38% at 98.18, while treasury yields were mixed: the 2-year down 1.2 basis points to 3.643% and the 10-year up 0.6 of a basis point to 4.176%. Oil prices moved higher again as geopolitical concerns increased on the escalating conflict in Ukraine, Brent up 1.02% to $70.13, and WTI up 1.14% to $65.72 a barrel. Gold also pushed back towards all-time levels hit earlier in the week on the back of those increased concerns and the weaker dollar, up 0.28% on the close to $3,759.98 an ounce.
Geopolitical Risks Increase to Start the Week
There has been a lot of focus on central banks over the last couple of weeks for investors, with the Fed, of course, front and centre after it made its first rate cut of the year. However, traders are now turning their attention to geopolitical risks that have been increasing over the last few weeks, particularly in Ukraine, where the war with Russia seems to be escalating sharply rather than receding. Just a few weeks ago, we had President Trump strongly touting a pending ceasefire, but the situation seems to have flipped sharply, and markets are reacting. Both Brent and WTI contracts recorded their best weeks since mid-June last week, and we have seen Gold hit record levels over the last week as well. Expect trader focus to remain on Ukraine in the coming days, with any further escalation in the fighting likely to see strong moves north for both Oil and Gold.
Quiet Calendar Day to Start the Week
It’s a relatively quiet data calendar day to kick off what will probably be another lively week ahead for global markets. There is little scheduled in the Asian session today, although traders may be pricing in the escalating conflict in Ukraine after more drone strikes over the weekend, which could see havens and Oil rally on the open. The London session sees the first of the week’s key inflation updates drop, with Spanish Flash CPI (exp +3.1% y/y) due out early in the day. We are also set to hear from several central bankers during the course of the day, with the MPC’s Ramsden and Buba President Joachim Nagel speaking early in the day before a raft of Fed members, including Waller, Hammack, Musalem, Williams, and Bostic, hit the circuit. The New York session also sees the first US data of the week in the form of the Pending Home Sales numbers; however, expect data coming later in the week to have a considerably greater impact.
