US Stocks Close at Record Levels – Dow up 1%
US stock markets rallied again on Friday as investors shrugged off a stronger-than-expected Core PCE print to focus on receding geopolitical risks. The Dow led the way, closing up 1.00%, followed by the S&P and Nasdaq, which both closed up 0.52% at record levels. US Treasury yields pushed higher after the PCE data came in at 0.2% against the expected 0.1%, the 2-year up 2.9 basis points to 3.748%, and the 10-year up 3.5 basis points to 4.277%. The dollar edged slightly higher, with the DXY up 0.07% to 97.40, but remained trading near annual lows. Oil prices were steady, having dropped over 12% over the course of the week, with Brent up 0.06% to $67.79 and WTI up 0.43% to $65.52 a barrel, while gold took a big hit on the improved investor sentiment, down 1.61% on the day to $3,273.40.
US Jobs Data in Focus This Week
US jobs numbers are in focus this week, and traders are bracing for volatility in the New York sessions in what is a shortened week, with the July 4 holiday closing local markets on Friday. Weakening jobs numbers over the last few months have helped lift expectations of Fed rate cuts in the second half of the year; however, any big deviations from expectations this week could swiftly change what is priced into current markets, especially if we see any surprise strength. JOLTS Job Openings (exp. 7.45 mio) are the first cab off the rank on Tuesday, followed by the ADP Non-Farm data (exp. 105K), before we have a deluge of data hit around the same time on Thursday. The headline Non-Farm Payrolls (exp. 120K) are due out early on Thursday but are released along with Average Hourly Earnings (exp. 0.3% m/m), the Unemployment Rate (exp. 4.2%), as well as the usual Weekly Unemployment Claims (exp. 239K), so traders will be digesting a lot of information all at once. As always, expect the NFP number to dominate; however, any big prints off expectations in the other releases could see more moves in the market.
Bullish Market Sentiment to Start the Week
Asian markets are expected to start on the front foot today after positive news on trade deals between the US and its trade partners continued to filter through to the market over the weekend. The initial focus in Asia will be on Chinese markets, with some key data due out early in the session. The Manufacturing PMI (exp. 49.6) and Non-Manufacturing PMI data (exp. 50.3) will be closely monitored by traders, and anything significantly off expectations could see big moves in what are still sensitive markets. The London session will have a strong focus on European updates, with the German Prelim CPI data (exp. 0.2% m/m) out early in the day, before attention moves south to Sintra in Portugal for the annual ECB Central Bank Conference. There is little on the calendar in the US day today ahead of what is a busy week for jobs numbers; however, we do hear from Fed members Bostic and Goolsbee, which could give a bit more clarity on the Fed rate outlook.
