Nasdaq Surges 2% on Weaker US Data
US Stock markets got a shot in the arm from PPI data last night and surged to the topside. Both PPI numbers and weekly unemployment data indicated a slowing in the US economy and equities took off on increased expectation of an end to the Fed’s aggressive tightening cycle. The Nasdaq led the way closing the day just shy of 2% up with the S&P and Dow following in its wake, finishing the day up 1.33% and 1.14% respectively. The dollar fell off in light of the data with the Euro hitting yearly highs and Gold maintained its position trading north of the $2,000/oz level.
Euro Flying High
The Euro hit fresh yearly highs overnight against the greenback as new data showed further slowing in the US economy. On interest rate differentials alone the EurUsd trade looks like it has more distance to run and key indicators in the fixed interest markets are giving credence to this view. Overnight the gap between US and German 10-year yields narrowed to its lowest in two years and although Germany is only one part of the Eurozone it is significant, and many investors pay close attention to this correlation. From a technical perspective, the recent break of longer-term trend line resistance on the Daily chart opens the way for a move towards 1.1700 for the single currency.
The Trading Week isn’t Over.
It’s been one of those very long, short weeks for financial markets with the Easter holidays keeping things relatively subdued at the start but a plethora of data and central bank action adding a fair amount of volatility since – and we still have another 3 sessions to go. Markets are buoyant after slipping data in the US but there are still a few potential banana skins before we close for the weekend. In terms of data releases, it’s quiet in the Asian and European sessions, however once again the thinner liquidity US session could see a bit of action. On top of US Retail Sales and the University of Michigan Sentiment numbers there are also several heavy-hitting banks releasing earnings data and this could see some sharp moves into the weekend.
