US Stocks Retreat Ahead of Big Week – Nasdaq down 1%
US Stock markets dropped again on Friday as investors looked ahead to a huge week in financial markets dominated by central banks and a plethora of data releases. The Dow fell 0.49%, the S&P dropped 0.65% and the Nasdaq closed down 0.96%. US treasury yields edged higher again, the 2-year adding 3.9 basis points to push back to 4.730% and the 10-year gaining 1.4 basis points up to 4.310% on the close. The dollar had a relatively flat day, although notched a solid 0.7% gain on the week and it was a similar story for Oil, which saw slight declines, Brent finishing at $85.33 per barrel and WTI trading back down to $81.09 per barrel. Gold drifted lower again to notch up a 0.8% loss for the week, trading around the $2,155 level on the close.
Central Banks to Dominate the Week Ahead
Global financial markets are bracing for a volatile week ahead as traders prepare for several major central bank updates in the days ahead. It is not just the amount of rate calls that has traders on their toes but that some are coming at very pivotal points in time in monetary policy cycles. We have the Reserve Bank of Australia, the Bank of Japan, the Federal Reserve, the Swiss National Bank, and the Bank of England all set to deliver rate updates with most expected to leave rates on hold. Top of the list for a potential move is the BOJ, which could end its negative rates regime this week and recent inflation data in the US has pushed the Fed up in terms of potential market impact with them now expected to be more hawkish in their forward guidance. Currency traders are particularly keen to see some changes in the interest rate differentials this week and all 5 of these major central banks have the capacity to set some strong moves off across their local currencies.
Quiet Start to a Busy Week
It is set to be a relatively quiet start to the trading week today before the potential chaos of central bank updates and data releases kicks in. There only tier 1 event on the calendar today comes out from China in the Asian session with the release of key Industrial Production and Retail Sales data. Sentiment is relatively weak after stocks took a hit to the end of last week and a poor number could see another push lower in Asian bourses. There is little of note in the London and New York sessions today and traders are expecting to see rangebound conditions ahead of what promises to be some busy sessions in the days ahead.
