Markets Start the Week on the Front Foot
Global financial markets are expected to start the week on the front foot today after US Stock markets drove higher again on Friday as the bond market stabilized. Investors took a glass-half-full approach to a steady bond market and dove back into equities, the tech-heavy Nasdaq gained the most, posting its biggest day since late May to close up 2.05%, the S&P rose 1.56% and the Dow added 1.15%. Treasury yields had a mixed day with the long end mostly finishing the day lower whilst short dates mostly retained the big gains made on Thursday. The dollar slipped on the majors but remained in recent ranges and Gold extended its recent losses, now trading under $1,940/oz.
Focus on US Markets Again this Week
Investors will always focus on the world’s biggest economy to look for market sentiment and direction and once again this week we have key date out of the states that could dictate medium term direction. Investors have been jumping on the fact that we may have ended the prolific tightening cycle that has taken US rates to 22-year highs recently and Friday’s jump in stocks was a good indication of market optimism. However, there are still some question marks for some on how well-placed this optimism is, the Fed certainly has been trying to play a more balanced game and have advised that we need to see more consistent data showing a slowing in inflation before we can get serious about rate cuts in the near future. This week we have key CPI and PPI data releases along with Retail Sales numbers, plus more updates from Fed members and experienced traders are expecting to see more volatility around these events, especially if they do not support the recent narrative.
Quiet Calendar Day to Start the Trading Week
APAC markets are expected to take the lead from a strong day on Wall Street on Friday and start the trading week on the front foot. There is little on the event calendar to change that momentum in the first session of the day, although the Chinese Loan data being released midway through the day could spice things up a bit. There is little out in the later two sessions and so traders are expecting the focus to remain on sentiment and anticipation of key data releases out later in the week.