US Stocks Surge to Record Levels – Nasdaq Up 2.5%
US stock markets experienced the surge many investors had been anticipating after the Fed’s 50 basis point cut on Wednesday. Both the S&P and the Dow hit record levels, adding 1.70% and 1.26%, respectively, on the day, while the Nasdaq jumped 2.51% by the end of trading. US Treasury yields had a mixed day: the 2-year lost 2.3 basis points, dropping to 3.604%, while the 10-year rose 5.1 basis points to 3.738%. The dollar took a significant hit, losing 0.38% on the day, with the DXY now sitting close to annual lows. Oil and gold prices gained on the back of the weaker dollar, with Brent up 1.7% to $74.88, WTI up 1.5% to $71.95, and gold nearing record levels again, closing the New York session at $2,588 per ounce, up 1.2% on the day.
The Pound in Focus After Bank of England Holds Rates at 5%
The Bank of England kept interest rates at 5% and indicated they are not in a rush to ease rates, which helped push Cable to a new yearly high above the 1.3300 level. The move was further aided by dollar weakness that followed the Fed’s 50 basis point cut on Wednesday, potentially setting Cable up for further gains as interest rate differentials between the two central banks impact the market. Markets are now pricing in just 42 basis points of easing from the BOE, while across the Atlantic, expectations for at least 70 basis points from the Fed are building. Traders will be looking for levels to buy in the coming days, while remaining mindful of Cable’s tendency for volatility and adjusting their levels accordingly.
Another Busy Day Ahead for Traders
Traders are expecting another busy day to close out the week, with major risk events scheduled across all three trading sessions. The focus during the Asian session will be the Bank of Japan’s rate call, set for midday, while Chinese markets will keep a close eye on the Loan Prime Rates, scheduled earlier in the day. The European session will focus heavily on UK markets, with Retail Sales data due out of London. The US session will initially focus on Canada, with Bank of Canada Governor Tiff Macklem speaking and the latest Retail Sales numbers being released. Although little is scheduled for US data, given the Fed’s move on Wednesday and recent volatility, traders expect an active session heading into the 5 p.m. close.
