US Stocks Rally Again Ahead of Fed – Dow up 0.85%
US stock indices rallied for the second consecutive session yesterday as investors sought value ahead of this week’s Federal Reserve meeting. The Dow finished up 0.85%, the S&P added 0.64%, and the Nasdaq rose 0.31%. The dollar took another step down after weaker retail sales figures, with the DXY dropping 0.32%. Treasury yields had a mixed day following the data, with the shorter-dated 2-year gaining 2.7 basis points to move up to 4.044%, while the benchmark 10-year fell 1.4 basis points to 4.298%. Oil prices were mixed as well, with Brent finishing up 0.69% at $71.07, whilst WTI lost 0.37% to move down to $67.33 a barrel. Gold remained bid near recent record levels, gaining 0.58% to close the NY session at $3,001.47.
Gold Remains in Focus for Uncertain Markets
Gold remains in demand while trading at record levels at the moment, as uncertainty continues to dominate markets. Investors are hoping for greater clarity this week from central banks and data updates. If this materialises, we could see some profit-taking and a pullback in gold prices. However, geopolitical developments will compete with fundamentals for headlines, and if they continue to instil doubt in investors’ minds, recent moves could extend even further, potentially breaking decisively above the $3,000 level. There is also a risk that central banks will strongly acknowledge this uncertainty, which could provide further upside potential. For most traders, the trend remains their friend, but they are prepared to act swiftly if conditions change in the next few days—particularly when we hear from the Fed late on Wednesday.
Markets Brace for More Volatility in the Days Ahead
Traders are preparing for increased volatility in the coming days as the macroeconomic calendar begins to intensify, bringing key data updates and major central bank rate decisions. Today’s calendar is relatively quiet, but the next few sessions are expected to be very busy. The Asian session today has little scheduled to move the markets, but some significant data releases are due in the next couple of trading sessions. The German ZEW Economic Sentiment data is set for release during the London session today, with expectations for a 48.1 print—significantly higher than last month’s 26.0 result—reflecting recent updates on government spending plans. Once New York opens, the focus will shift to Canadian markets, with key CPI figures due shortly after the open. Expectations are for a 0.6% increase in the headline month-on-month data and a 2.7% print for the median year-on-year update.
