General Market Analysis 26/02/2024 – IC Markets

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Stocks Kick off the Week in Bullish Mode

US Stock markets finished the week off well on Friday, the major indices didn’t see the same sort of gains that they experienced on Thursday but crucially there was no dramatic pullback. The Dow and S&P both managed to end on another record high, albeit the S&P rising just 0.04% and the Dow adding 0.16%. The Nasdaq dropped 0.28% by the end of trading but given its near 3% gain on Thursday some profit taking had been expected. The dollar had another relatively flat day and US treasury yields fell from recent highs, the benchmark 10-year losing 7.1 basis points to drop to 4.255% and the 2-year losing 2.2 basis points to 4.691%. Oil prices took a hit on the day, Brent losing 2.5%, down to $81.62 per barrel and WTI dropping 2.7% to trade back to $76.49 a barrel. Gold bucked the trend, gaining 0.8%, trading back up to the $2,040 level before settling near $2,036 by the close.

Investor Focus to Switch Back to Rates

It has been a stellar few weeks for US stock markets as strong corporate results – led by market darling Nvidia – have pushed indices to record levels. However, there is now some concern that investor focus will move back to the bigger macroeconomic picture and the ability of the FOMC to cut rates in the next few months in the face of strong data in the states. If monetary policy does move back into the spotlight, then some feel that rising bond yields may push stocks into a corrective phase as the euphoria from earnings fades. This week we have the Fed’s favoured inflation indicator in the form of the PCE Price Index and a surprise result either side could see some strong moves in the market.

Another Quiet Monday to Start the Week

It does look set to be a relatively dour start to the trading week today as investors look to remain on the front foot after good moves last week The macroeconomic event calendar is very quiet again today and therefore traders are expecting more rangebound conditions ahead, although most are looking to buy on dips in the current environment. There is nothing to trouble the scorers in the Asian session today, but there will be some focus on the pound once London opens as the market hears from MPC members Breeden and Pill during the day. The New York session see’s the latest release of the New Home Sales data in the US with market expectation that 680k new dwellings were sold last month.

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