Stocks Mixed After Weaker CPI Data – Nasdaq up 1.61%
US stocks experienced a mixed day in trading yesterday as CPI data came in weaker than expected. The Dow dropped lower over the course of the day, losing 0.64%, but talk of an investment deal with Saudi Arabia helped bolster tech stocks, helping the S&P to gain 0.72% and the Nasdaq 1.61%. The dollar fell against most of the majors after the data, the DXY losing 0.77% to 100.97, whilst yields edged lower—the 2-year down 1 basis point to 4.000% and the 10-year off 0.6 of a basis point to 4.465%. Oil prices continued to surge on trade news, Brent gaining 2.34% to move up to $66.48 and WTI up 2.78% to $63.67. Gold prices recovered some of the previous day’s losses, up 0.45% on the day to close at $3,247.56 an ounce.
Gold in Focus as Trade Sentiment Turns
Investors are now starting to reevaluate their gold positions in light of the recent trade updates that indicate a full global trade war will probably be averted, and deals will be done on a jurisdiction-by-jurisdiction basis with the US. Gold has risen just shy of 38% since a low just after President Trump was elected, and despite recent pullbacks, still sits at relatively elevated levels. Much of the push higher has come from a ‘flight to safety’ for funds as the new US administration looked to implement sweeping trade reforms. But now, as some clarity—and only some—creeps back into the market, traders are trying to assess how much of recent trade tensions had been priced into the market and therefore how much of a retrace we might see in the world’s favourite precious metal. We are now sitting around 7% off the all-time high, but many traders are now thinking that if the world trade situation stabilises more in the coming days and weeks, we could see further downside for gold. Short-term support now sits around recent lows at $3,200, with stronger support on the daily trendline level of $3,100.
Traders Focus Back to Geopolitics on Quiet Calendar Day
Geopolitical updates are due to once again influence markets today, with little on the macroeconomic calendar to distract traders. The Asian market is likely to open on the front foot today after a good day on Wall Street and trade optimism still prevalent in the market. There will be an early focus on Australian markets, with the Wage Price Index out this morning (exp +0.8% q/q) ahead of tomorrow’s key employment numbers; however, the impact will be localised as the region looks at the bigger trade picture. We do have some updates from central bankers over the course of the latter two sessions today, including Buba President Joachim Nagel and Fed members Waller and Jefferson, as well as the weekly US Crude Oil Inventory data, but again, investors are expecting trade updates to have the greater impact.
