US Stocks Push Higher on Tariff Pullback – S&P up 1.7%
The major US stock indices enjoyed another good trading day yesterday as more good news came from the White House on tariffs. President Trump advised that China may have a new tariff rate within the next two or three weeks, and investors responded positively. The Dow gained 1.07%, the S&P 1.67%, and the Nasdaq jumped 2.50%. The dollar also had another positive day, with the DXY up 0.34% to 99.82, with haven currencies again on the receiving end. Treasury yields were mixed, the 2-year up 7.4 basis points to 3.871%, and the 10-year down 2 basis points to 4.381%. Oil prices fell on a report that OPEC+ will increase production further, with Brent down 1.97% to $66.11 and WTI down 2.20% to $62.27. Gold took another hit as more haven selling hit the market on the more positive sentiment, down 2.92% on the day to $3,287.63 an ounce.
Dollar Bounces Again on More Trade Optimism
The US dollar gained back some of its recent huge losses in trading again yesterday as calmer heads seem to be prevailing in the US government with regard to trade tariffs, as well as the pullback on threats to fire Fed Chair Jerome Powell. The dollar index (DXY) has sunk over 6% this month and over 11% from peak to trough on the year, and still looks under pressure from a technical perspective. It has rallied just over 2% in the last couple of days after recent updates, but traders feel that the next few days could be pivotal with regard to its medium-term future. A solid Federal Reserve Bank that has been resolute in rate cut expectations should lead to strength for the greenback, and an easing of tariffs should have the same effect. Whereas any further angst against the central bank or implementation of strong tariffs should see it fall further.
Geopolitics Still in Focus Today
The Asian session should start the day on a positive footing again after Wall Street had another strong day on much more optimistic headlines with regard to tariffs. There is little on the schedule to affect that momentum in the first trading session of the day, and investors will be hoping that the relative euphoria continues. It is a similar story in the European session today, with just the German IFO Business Climate data due out, although this is expected to have dropped from last month’s reading – down to 85.1 from 86.7. The New York session does have some key data due out, with the Weekly Unemployment Claims numbers expected to print 222k and Durable Goods showing a tariff-influenced 2.1% month-on-month increase, although once again any updates from the President and government are set to dominate sentiment.
