US Markets Hit Over 1% as Yields and earnings Hit Home
US stocks took a big hit yesterday as investors assessed the situation in the middle east and the impact of rising treasury yields – these moves also backed by some comments from Fed members. The Dow Jones fell 0.98%, but was outstripped by both the S&P and the Nasdaq which dropped 1.34% and 1.62% respectively. Currencies were once again relatively well behaved with the dollar gaining some ground against most of the majors, however there were bigger reactions in the more risk sensitive Oil and Gold markets with Oil jumping 2% and Gold breaking through to hit levels not seen since mid-July.
Buy Gold Wear Diamonds!
It’s a well known phrase in the market, but normally associated with dollars, however the sentiment has rung true over the 8 days of trading where Gold has risen like a phoenix from the flames to add nearly 8.5% to its value. Traders are bracing for more appreciation with the situation in the middle East not looking to calm in the short term. We hit a fresh high over night just above $1,960 and have seen a small sell off since, but traders are expecting more topside moves before there is any change in the underlying fundamentals. The next target is the July high just under $1,990 and a break there opens the way for more moves to challenge all time highs again.
Busy Day Ahead for Markets
It is set to be another busy day ahead for traders as Middle East tensions and data releases keep the markets on their toes. The Asian session see’s early focus on Australia with the latest job numbers due out early in the day, followed later by the RBA Annual Report. The European session is relatively quiet, but the calendar picks up again once New York opens with the usual weekly unemployment claims data as well as the Philly Fed Manufacturing Index numbers and once again we have a plethora of Fed speakers scheduled, led by the Chair Jerome Powell.
