Markets Volatile After Weak Data – Nasdaq up 0.5%
It was a mixed day for global markets yesterday after weaker than expected data in the US showed further signs of slowing for the US economy. Stock markets had a mixed day, the Nasdaq finishing the day up 0.56%, the S&P up 0.11% whilst the Dow dropped 0.3%. US Treasury yields took a pounding, the 10-year losing 11 basis points to trade back to 4.402% and the 2-year dropping 8 basis points to 4.81% as rate cut expectations once again increased. The dollar also suffered, losing 0.4% against its contemporaries to trade down to a 3-week low. The most notable mover on the day was Oil with both contracts losing over $3, Brent dropping 3.4% to $78.36 a barrel and WTI losing 3.6% to $74.22 a barrel as traders fully digested the impact of the weekends OPEC meeting that allowed for voluntary options for members to drop out of production cuts. Gold gained ground as the dollar declined, up 0.9% on the day back to $2,347 by the NY close.
Black Gold in Trouble – Oil Drops 3%
Oil prices dropped to their lowest levels in four months in trading yesterday as investor concerns on supply excesses reared their head following this weekend’s meeting. The headlines that production cuts had been maintained initially led to little movement in the market, however the devil is in the detail and the fact that room had been left for some of those cuts to be voluntarily unwound from October led to the sharp decline in prices. The demand side of the equation does not read well either with last week’s US Oil inventories coming in higher than expected after the start of the ‘driving season’ in the US failed to meet demand expectations – we will get more detailed data out of the US this week and if that shows that Memorial Day weekend consumption was much lower than expected then expect further downside potential for Oil in the days ahead.
More Volatility Ahead in Trading Today
It was a volatile trading day for investors yesterday and they are bracing for more of the same in the sessions ahead today. Traders in Asia have little on their plates in terms of risk events today, however there are a couple of tier 1 releases in the latter two trading sessions. The Swiss CPI data is due out early in the European day and given recent moves in the franc, traders are expecting to see further volatility if the print is significantly off the expected 0.3% month-on-month increase. We have the first US jobs numbers due out shortly after the New York open with the JOLTS Job Openings data release, market expectation is for an 8.4mio print and investors will be looking closely at this number as the first piece in the job market puzzle for the week.
