US Stocks Push Higher Again – Dow Up 0.7%
US stock markets pushed higher in trading yesterday despite less-than-stellar earnings results from major players, as investors focused on a temporary respite on tariffs and potential rate cuts from the Fed. The Dow led the gains, closing up 0.71%, followed by the S&P and Nasdaq, which closed up 0.21% and 0.19% respectively.
US Treasury yields declined, with the benchmark 10-year dropping 8.4 basis points to 4.426% and the shorter-dated 2-year losing 2.9 basis points to 4.185%. The dollar also pulled back against the majors, with the DXY down another 0.38% to 107.65.
Oil prices fell sharply as US inventories came in much higher than expected, with Brent down 1.92% to $74.75 and WTI dropping 2.04% to $71.22 per barrel. Meanwhile, gold powered higher once again, reaching new highs and closing up 0.69% at $2,862.20.
Bank of England Rate Cut in Focus
After last week’s flurry of major central bank interest rate announcements, traders have had just one key focus this week—the Bank of England’s rate decision, due later today. The BoE is expected to cut rates by 25 basis points from 4.75% to 4.50%, with eight MPC members voting for a cut and one for a hold.
Sterling has appreciated against the dollar over the past few sessions, but today’s announcement is likely to bring increased volatility to GBP/USD. Given the anticipated rate cut, traders will be closely watching the MPC’s statement and policy report for guidance, with most market participants expecting further rate reductions. Any deviation from this expectation could see the pound making further gains against the greenback and other major currencies.
Central Banks and Data Ahead Today
Asian markets are set to open on a positive note today following another strong performance on Wall Street, despite some disappointing earnings results from major firms. New Zealand markets will be closed for Waitangi Day, which may affect liquidity in the NZD, but otherwise, there is little on the economic calendar to hinder risk trades from making further gains.
In the European session, the UK will be in focus, with Construction PMI data released early in the day, though the main event will be the Bank of England’s rate decision.
The New York session will see the release of the usual weekly US unemployment claims data, along with Canadian Ivey PMI figures. Later in the day, markets will hear from the Fed’s Christopher Waller and the Bank of England’s Andrew Bailey, which could add further volatility to currency and bond markets.
