Stocks Hit Fresh Historic Highs After Weak Data – Nasdaq up 0.8%
US Indices again traded up to all-time highs yesterday as weaker US data prints pushed yields lower and increased expectations of a September rate cut from the Fed. The Dow closed down 0.06%, but the tech heavy S&P and Nasdaq powered to new highs, closing up 0.51% and 0.88% respectively. Treasury yields fell off again with the rate sensitive 2-year dropping 3.1 basis points to 4.708% while the benchmark 10-year fell 7.7 basis points to 4.359%. Oil prices jumped as US inventories took a big hit, Brent and WTI both up 1.3% to $87.34 and $83.88 a barrel respectively and Gold broke out of its recent range to close 1.2% higher at $2,357 an ounce.
UK Elections in Focus for Sterling Traders
It could be a very busy day ahead for sterling traders today with the UK election results set to hit markets late in the London day. The Labour party are expected to come charging home with a landslide victory as the UK goes to the polls, but traders are bracing for volatile conditions in the pound if there are any surprises. The risk for traders sits with any unexpected swing to the right, with the conservatives or Reform party picking up more votes than expected. The uncertainty of a hung parliament would probably be a big negative for the pound and given the fact that US markets are closed just when most of the results are hitting the newswires, traders are concerned that any moves could be greatly exacerbated.
Potential for a Volatile Day in Markets
It looks set to be an interesting day ahead for investors today with US markets closed for the July 4th Independence Day holiday likely to lead to very thin trading conditions in the late session. There is very little on the event calendar in the Asian session, but things should start to get lively once the European day kicks off. Swiss traders will be on their toes early in the session as the latest CPI data is released but expect the focus to be on UK markets for the majority of the day. The latest Construction PMI numbers are due out in London, but the real market mover will be any surprises in the UK election results. US markets are closed later in the day and traders are bracing for sharp moves, particularly in the pound and the Yen if UK election results differ or the Bank of Japan decide to make a move.
