Mixed Stock Markets as Volatility Reigns
US markets had another whippy day as investors continued to come to grips with changing fundamentals and more geopolitical concerns whilst in the middle of earnings season. The Dow took the brunt of the action, finishing 0.58% down and the S&P lost 0.17% to close at its lowest level since May, whereas the Nasdaq finished up 0.27% in anticipation of good results from key tech players. The dollar continued to lose ground on the majors with the Euro and Cable blasting higher and USDJPY dropping off from that key 150.00 level. US treasury yields were smashed contributing to the sharp dollar correction as the 10-year fell sharply after hitting 5%.
Oil and Gold in Focus for the Conflict Trade
Oil and Gold have been amongst the most volatile financial products over the last few weeks as investors have looked for defensive trades in light of the conflict in the Middle East. Gold has rallied over 10% and Oil by a similar amount since Hamas forces attacked Israel, but we have seen significant corrections over the last few trading sessions as the anticipated ground invasion by Israeli troops has been held off by diplomatic measures and some hostages have been released. It now feels that we are at a pivotal point for both the situation in the Middle East and indeed for traders with an escalation ie. An attack by Israel surely led to a resumption of topside risk for both Gold and Oil and any easing contributing to further corrections. Many will be hoping that we see both products trading lower in the very near future.
Event Calendar Kicks into Life Today
After a quiet start to the week in terms of scheduled economic events yesterday, investors are preparing themselves for a much busier day with the calendar full of tier 1 data releases and central bank updates. It’s actually a quiet calendar day in Asia but things pick up on the London open with the UK Claimant Count Change due out before a raft of Flash Manufacturing and Services PMI numbers from France, Germany and the UK. We also hear from RBA Governor Michelle Bullock when she speaks in Sydney at CBA’s Global Markets conference. Into the US session and we’re set to hear from ECB President Christine LaGarde before the same aforementioned PMI numbers are released in the US. Throw in some very big names earning reports and the added updates on progress in the Middle East and there is the recipe for a busy trading day ahead.
