General Market Analysis 25/01/2024 – IC Markets

More Records Tumble on Wall Street – Microsoft Tops $3 Trillion

Wall Street continued to notch up record highs again in trading yesterday as the stock market bull run continued. The percentage increases in the indices were not too impressive, the S&P adding just 0.08%, the Nasdaq 0.36% and the Dow dropping 0.26%, but the levels are starting to look very good. That was the fourth straight record high close for the S&P and the Nasdaq’s highest level since January 2022, individual firms were also notching up new records, Microsoft’s value topping $3 trillion for the first time and Netflix surging over 10% to hit a 2-year high. US Treasury yields pushed higher after PMI data exceeded expectations, the 2-year gaining 3 basis points and the benchmark 10-year adding 4 basis points and the dollar regained earlier lost ground finishing the day down just 0.2% on the index. Oil moved higher, gaining 1% on the day and Gold dropped sharply after the US data, now trading back under $2,015/oz.

Loony Smashed After Bank of Canada Holds Rates

The Canadian dollar was smashed yesterday after the Bank of Canada held rates steady at 5% after its latest meeting. The ‘hold’ was fully expected by the market but the consequent message from Governor Tiff Macklem in the press conference was more dovish than most participants had anticipated. He advised that discussions had now moved to debating how long rates will stay restrictive rather than how high they will go, and although he didn’t feel an outright recession was needed to bring inflation back in line, he did feel a period of weak growth was appropriate. These comments gave a green light to ‘Loony’ bears and the currency knee-jerked lower against the greenback and on the crosses. Traders will now look at upcoming data points to confirm the banks stance, but as long as there are no indications that inflation is moving higher, then we should see further downside for the Cad over the medium term.

ECB in Focus for Traders Today

The major focus for traders will undoubtedly be the latest rate update from the European Central Bank. There is very little on the event calendar to trouble traders in the Asian session, but the Euro is set to move once the London session starts in earnest. The German Ifo Business climate data is due out early in the day, but the main focus will be on the ECB and, probably less on the rate call, which is firmly expected to remain on hold at 4.50%, and more on the message for the market in the statement and press conference. The New York session should see more volatility with stocks at all-time highs and data releases coming in the form of the latest GDP update, weekly unemployment claims numbers and Durable Goods data.

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