Markets Pull Back on Tariff Confusion – Dow Down 0.4%
Financial markets took a bit of a breath in trading yesterday after a couple of hard weeks of volatility to assess exactly where we stand with tariffs and what the possible impact is. The major U.S. stock indices all drifted lower — the Dow dropped 0.38%, the S&P 0.17%, and the Nasdaq finished marginally off, losing just 0.05%. Treasury yields also experienced a relatively quiet day, the 2-year closing flat at 3.845%, while the 10-year lost 4.1 basis points to move down to 4.333%. The dollar edged higher against most of the majors, with the DXY up 0.36% to 100.17. Oil contracts also traded in their tightest ranges for a while, Brent gaining just 0.01% to $64.89 and WTI dropping 0.32% to $61.33 a barrel, whilst gold pushed back towards all-time highs again, gaining 0.6% on the day to close at $3,229.24.
Gold Pushing for More Records
Gold prices moved back higher again overnight and look like they could challenge the $3,245.28 high that was set a few days ago in the coming sessions. Global uncertainty over the last few months has enabled the world’s favourite safe-haven product to climb over 24% this year, and that has increased since “Liberation Day.” However, some in the market are preparing for a sharp turnaround if conditions change. One question for gold traders is just how much downside has been priced into this gold move — and then they are looking at how far it can fall back if we see global growth concerns retract. Overnight, President Trump called on China to come to the negotiation table, and if that were to happen — and lower tariffs, or even the removal of tariffs, were to occur — then we could see gold prices drop, and drop hard. As always in these markets, traders will continue to monitor newswires for updates and will have to react quickly to fresh developments.
Busy Calendar Day Ahead for Traders
Market volatility dropped considerably over the last few sessions, and investors will now get the chance to have a look at the underlying fundamentals with a full calendar day ahead. The Asian session will have a strong focus on Chinese markets, with the usual big monthly data drop due midway through the session: GDP (exp +5.2%), Industrial Production (exp +5.9%), and Retail Sales (exp +4.2%) will be the main focus, and anything significantly off expectations should see further moves in Chinese markets. The U.K. is again in focus at the European open, with the key CPI data (exp +2.7%) due out, and traders are expecting more moves for the pound on the release. However, the New York session looks set to be the busiest, with U.S. Retail Sales (exp +1.3%, Core +0.4%) due for release early in the day, followed by the key interest rate update from the Bank of Canada, where rates are expected to be held at 2.75%. To add more fuel to the fire, we are also set to hear from Fed Chair Jerome Powell later in the session when he speaks in Chicago.
