Muted Start to the Trading Week for US Markets – S&P Up 0.24% to New High
US stock markets experienced a relatively quiet start to the trading week after a long weekend, as investors looked ahead to Fed minutes and further geopolitical uncertainty. The S&P managed to push higher to record a fresh closing high, finishing the day up 0.24%, while the Dow and Nasdaq both ended close to flat, up 0.02% and 0.07%, respectively.
Treasury yields saw more movement, appreciating across the curve, with the 2-year yield up 4.7 basis points to 4.306% and the 10-year yield up 7.4 basis points to 4.550%. The dollar also recovered more of last week’s losses, with the DXY up 0.23% to 107.05.
Oil prices jumped as traders priced in issues with the Ukrainian peace deal, with Brent up 0.78% to $75.81 and WTI rising 1.51% to $71.81. Gold pushed higher again on further tariff uncertainty, closing up 1.26% at $2,933.72, once again nearing record levels.
Markets Poised for Big Moves
Some investors believe we could see significant market movements over the coming months, with various products trading at sensitive levels that support this assumption. On one hand, global stock markets continue to push higher and close at record levels—the S&P last night and the DAX the night before are good examples. At the same time, gold, the world’s favourite haven trade, is also hitting record highs, leading some market participants to believe that something has to give—and when it does, it could be messy.
Investors are now seeking greater certainty, particularly from the new US administration. If policy implementation begins in the next few months, expect some of the aforementioned trades to either correct sharply or trend higher.
Central Banks and Geopolitics in Focus Today
It has been a relatively quiet start to the trading week so far, despite a rate cut from the RBA yesterday and some key data updates, but traders expect volatility to pick up today.
The Asian market will initially focus on Australia’s Wage Price Index data, before shifting across the Tasman to New Zealand for the RBNZ rate call and press conference. The European session brings another round of key UK data, with CPI figures expected to show a 2.8% year-on-year increase. The wait continues until late in the US trading session for the release of the FOMC Meeting Minutes. With central banks and geopolitical factors in focus, markets are bracing for an eventful session ahead.
