Stocks Rise Following China Stimulus – Nasdaq Gains 0.5%
US stock indices climbed higher once again yesterday, setting new record highs as a significant stimulus package from China boosted investor confidence. The Dow and S&P 500 both achieved fresh all-time highs, closing up by 0.20% and 0.25% respectively, while the tech-heavy Nasdaq surged by 0.56%. US Treasury yields dipped slightly, with the 2-year yield falling by 3.6 basis points to 3.540% and the 10-year easing by just 0.1 of a basis point to 3.733%. Meanwhile, the dollar faced further pressure after weak US Consumer Confidence data, dropping to near annual lows on the index at 100.35. Oil prices also rallied amid global optimism, with Brent and WTI both rising by 1.7% to close at $75.17 and $71.56 a barrel respectively. In a continuation of its upward trend, gold reached yet another record high, touching $2,644.25 before settling at $2,656.92 an ounce.
“Sell Dollars, Wear Gold”
This phrase may not be as prevalent as the traditional ‘Buy Dollars, Wear Diamonds’ among financial markets traders, but it certainly would have yielded the best returns over the past year. Gold has continued its remarkable ascent, now up more than 33% from its 2024 low. The world’s favourite precious metal shows no signs of slowing down in 2024, with some traders predicting further gains as geopolitical risks rise globally, particularly with the uncertainty surrounding the upcoming US presidential election, where the candidates are neck-and-neck in the polls. The dollar’s outlook also appears bleak, with expectations of further Fed rate cuts and the greenback poised to decline across the market. While contrarians might highlight the rapid pace of recent gains and warn of potential sharp pullbacks—the 200-day moving average currently stands at $2,281—dips are likely to be seen as buying opportunities unless there is a fundamental shift in the underlying market dynamics.
Event Calendar and Volatility Expected to Keep Traders Busy
A combination of market volatility and a relatively packed event calendar is expected to keep traders engaged over the coming sessions. The most significant data release of the day is likely to be the latest Australian CPI figures, which will be published early in the Asian session—a somewhat unusual timing, given it comes just a day after the RBA’s rate decision. With the Aussie dollar at a crucial juncture, a higher-than-expected year-on-year print, anticipated at 2.7%, could see the currency break through key resistance levels. The European session is relatively light on data, but the New York open will feature the latest Home Sales figures as well as the weekly Crude Oil Inventory update, both of which are likely to influence market movements.
