Tech Stocks Pull US Indices Higher – Nasdaq up 1.2%
US tech stocks helped to pull all three of the major US indices higher in trading yesterday, with Apple leading the way after it announced plans to manufacture products in the US. The Nasdaq led the way higher, gaining 1.21% to 21,169, followed by the S&P, which added 0.73% to move up to 6,345, and the Dow, up 0.18% to 44,198. Treasury yields had a bit of a mixed day—the 2-year down 1.3 basis points to 3.711%, while the 10-year added 1.8 basis points to move up to 4.228%. The dollar continued to lose ground on the majors, with the DXY down 0.54% to 98.25 as the Euro gained 0.73%. Oil prices dropped to an 8-week low on news that progress was being made in talks between the US and Russia, with Brent off 1.32% to $66.75 and WTI down 1.41% to $64.25. Gold drifted lower on some profit-taking on its post-NFP gains, down 0.35% on the day to $3,368.24 an ounce.
Oil in Focus with Geopolitics Dominating
Oil prices hit an 8-week low in trading yesterday, and traders are expecting to see more volatility in ‘Black Gold’ in the days and weeks ahead, with geopolitical updates set to dominate price moves. The US is squarely in the middle of a lot of recent moves, with various updates from the administration causing big changes in demand expectations. The potential for more tariffs and sanctions—India is firmly in the US headlights at the moment for continuing to purchase Russian oil—is concerning investors, whilst production increases from OPEC+ have also helped the move lower. Traders will continue to monitor newswires for fresh updates until we get some sort of clarity, but most expect the longer-term trend to be lower into H2 this year, as increased production combines with lower demand to weigh on contracts as we move forward.
Busier Day Ahead for Traders
It is the busiest day of what is a relatively quiet calendar week today, with some key data set to drop and a big rate call likely to be made by the Bank of England. The focus midway through the Asian day will again be on New Zealand markets, with the Quarterly Inflation Expectations data due out. The previous print was 2.29%, and something similar or lower would open the way for more cuts from the RBNZ and put some pressure on the Kiwi dollar. The big event of the day comes in the London session, with the Bank of England expected to deliver a 25-basis point interest rate cut midway through the day. However, there is much debate around the battle between high inflation and high unemployment, and forward guidance from the MPC should see plenty of volatility in the pound. The New York session sees the Weekly US Unemployment Claims data (exp. 221k) drop, before focus moves north of the border for the Canadian Ivey PMI numbers (exp. 55.2). Later in the session, we are set to hear from the Fed’s Raphael Bostic.
