General Market Analysis 01/03/2024 – IC Markets

Stocks Rally After on Target PCE – Nasdaq up 0.9%

US Stock indices rallied yesterday after the PCE Wage Index data came in largely on expectations. Both the S&P and the Nasdaq closed at record highs as tech stocks linked to AI once again led the way north. The Dow added 0.12%, the S&P 0.52% and the Nasdaq jumped 0.9%. US Treasury yields dropped slightly during the trading day, the 2-year losing 2.5 basis points to close at 4.623% and the 10-year dropping 4.3 basis points to 4.231%. The dollar slipped lower, but currencies were pushed more by local influences than any major reaction to the data from the greenback. Oil prices experienced a more muted day, dropping slightly, Brent now trading at $82.85 a barrel and WTI at $78.40 a barrel and Gold once again bucked the trend charging to a one-month high, gaining 0.6% on the day and closing around the $2,043 per ounce level.

Carry on Buying!

US Stock markets resumed their new normal trading conditions yesterday after the Fed’s favoured inflation indicator came in on expectations. Indices had taken a breather over the previous couple of days ahead of the key data print, but concerns were allayed when it came in on expectations and investors jumped back into buying mode. New record closes were hit in both the S&P and the Nasdaq as the equity juggernaut continued to roll higher. US stock markets appear bulletproof in the current environment as investors take a glass ¾ full approach to most economic updates. Yesterday’s data was in reality a bit of a damp squib as market had been treading water for much of the week ahead of its release. It appears that this now locks in a June date for the Fed’s first rate cut. This is being seen as a positive by investors, when only a few short weeks ago, and many index points lower, a March cut was a lock-in. Yes, we have seen some fantastic earnings numbers in the interim weeks, but some old heads are asking how much higher markets can go in the current conditions.

More Data in Focus for Traders Today

The new month is starting on a positive note after a strong session on Wall Street and it is set to be another busy day for traders as all three trading sessions have some key data inputs for the market to digest. The focus in APAC will be on China with the release of the Manufacturing and non-Manufacturing PMI numbers due midway through the session, investors will be hoping for more positive news in the world’s second biggest economy to help spur their markets higher. The European session see’s the release of the latest Core CPI Flash Estimate for the Eurozone and traders will be watching to see if it is another miss after yesterday’s print out of Germany. We have yet more US data due in the New York session, this time the ISM Manufacturing PMI numbers feature followed by the University of Michigan’s Consumer Sentiment data and we still have time for some more input from the Fed before we hit the weekend, members Bostic, Daly and Kugler are all set to speak later in the session.

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