Global Stock Rally Takes a Breather
Global stock markets saw a bit of consolidation during the trading day yesterday as investors attempted to digest the myriad of factors that have hit markets over the last few weeks. The major US indices all failed to continue the last few days pushes higher with the Dow, the S&P and the Nasdaq all finishing the day close to 0.5% down. The US dollar continued to fall off as we start to see a cooling in US data, the dollar index down 0.5% again as the Euro maintained its surge to the topside, now sitting around 1.0960. The Aussie dropped after we saw a halt in the RBA’s tightening cycle for the first time in 11 meetings and US treasury yields fell off again – the benchmark 2-year trading at 3.84%.
Oil Rally Slows After 6% Jump
The main story for markets at the start of this trading week had undoubtedly been the supply cut from OPEC+ countries and the consequent rally in Oil prices. Brent crude and WTI both jumped more than 6% on Monday but the move has now slowed as traders assess the other side of the equation with a potential drop in demand as they see slowing economies in both the US and China. Central bankers who were starting to see some light at the end of their inflationary tunnels were left shaking their heads as this added yet another dimension to the conundrum that they have been facing in the last few weeks. The market is now pricing in a 40% chance of a Fed hike in May but given all that has occurred over the last few weeks expect more volatility across the board until we get any real clarity for the way forward.
Central Banks and Data to Hit Market
Volatility looks set to remain in markets into the long Easter weekend as investors set themselves for more potential market moves as fresh data and central bank decisions hit the market. We’ve already seen a shock rate hike from the RBNZ as they raised 50bps rather than the widely expected 25 and data later on in the day could add to volatility. There is a plethora of Service PMI numbers due out in the European session but once again the main focus will be on US data with the ADP Non-Farms due out followed by the ISM Service PMI later in the session.
