US Stocks Rebound Ahead of Inflation Data – Nasdaq Up 1.5%
US stock indices rebounded strongly in trading yesterday as investors returned to tech stocks ahead of tomorrow’s key inflation figures. The Nasdaq led the charge, closing 1.45% higher, followed by the S&P 500, which gained 0.97%, and the Dow Jones, which advanced 0.3%. Treasury yields and the dollar consolidated near recent highs, with the 2-year yield dipping 4 basis points to 3.965%, while the 10-year added 0.9 basis points, rising to 4.028%. The DXY (US Dollar Index) edged up 0.06% to 102.54. Oil prices plummeted following news of a potential ceasefire in the Middle East, with Brent crude and WTI both dropping 4.63%, to $77.18 and $73.57 per barrel, respectively. Gold also retreated, losing 1.1% on the day to close the New York session at $2,614 an ounce.
Oil Prices Still in Focus for Traders
Oil markets experienced significant declines yesterday as speculation of a ceasefire between Israel and Hezbollah gained momentum. Traders anticipate continued volatility in the days ahead, with tensions in the Middle East still running high. Recent weeks have seen heightened volatility, with the conflict threatening to spill over into other parts of the world. Traders have been glued to news reports, seeking opportunities to capitalise on every new development. While positive news caused a sharp decline in oil prices yesterday, market participants remain acutely aware that the situation could change rapidly. Many traders are still looking to buy on dips, as uncertainty continues to dominate, and the potential for direct action by Israel against Iran could quickly reverse the recent moves, opening the door to further price gains.
Busy Day for Central Banks
Central banks are in the spotlight today, with two major events on the agenda. The Reserve Bank of New Zealand (RBNZ) delivered its rate decision early in Asian trading, followed by a long wait until the release of the Federal Open Market Committee (FOMC) meeting minutes towards the close of the New York session. The RBNZ is expected to follow the Federal Reserve’s lead this month with a significant 50-basis point rate cut, as recessionary pressures loom over the New Zealand economy. As always, traders will be scrutinising the central bank’s statement for forward guidance, which could spark moves in the New Zealand dollar. Any less dovish tone could see a rebound in the Kiwi after its recent decline against the US dollar. Later in the day, the FOMC minutes are likely to trigger volatility across markets, with the risk skewed towards further dollar strength if the Fed’s stance proves less dovish than previously anticipated.
