General Market Analysis 01/07/2024
US Stocks Drift After Inflation Data – Nasdaq Down 0.7%
The major US stock indices all drifted lower in trading on Friday after the key US PCE data came out largely on market expectations. The Dow lost 0.11%, the S&P 0.41% and the Nasdaq dropped 0.71% as geopolitical concerns weighed on the market. US Treasury yields edged higher, the 2-year closing close to flat, up just 0.4 of a basis point at 4.720%, but the 10-year added 5 basis points to close at 4.340%.
The dollar dropped slightly on the day, although traders will continue to watch Yen levels closely in the days ahead. Oil prices also failed to take too much from the data print, Brent up 0.02% to $86.41 and WTI down 0.24% to $81.54, whilst Gold pushed high in line with the lower dollar, finishing the New York session at $2,326 an ounce.
US Jobs Numbers in Focus for Traders this Week
There is a plethora of jobs numbers due out in the coming days from the US and investors are expecting to be watching these results very closely once again as the Fed has advised that it is monitoring the market closely for its potential impact on inflation. There are four separate US jobs updates in the next few days culminating in the Non-Farms of Friday and there is no doubt that that is the most influential.
Last month’s data had the JOLTS Job Openings, the ADP Non-Farms and the weekly unemployment claims all showing a slowing in the markets which heightened doves hopes for pending rate cuts, and saw a drop in the dollar, before the Non-Farms on Friday shot them all out of the water with a much higher print turning the market around. The dollar index was trading down near 104.00 going into that data print and has rallied to 106.00 in the weeks since then, so plenty of potential for FX markets in the days ahead, especially on Friday.
Lively Start to a Busy Week for Traders
It was a lively start to the trading day today as Euro moved a quick 40 pips higher on the back of a strong showing for the far-right National Rally party in the first round of the French election. Chinese PMI data came in slightly higher than expected over the weekend which could support local bourses once they open. There is little on the calendar in the Asian session today, but all eyes will be on the CPI data releases out of the German states once Europe opens, which could bring further volatility to the single currency. Canadian markets are on holiday for Canada Day, but US markets are open and could be busy ahead of a heavy data week, the ISM Manufacturing PMI data is released today which could move markets, but traders are expecting more moves off jobs numbers throughout the week. Later in the day we hear from ECB President Christine LaGarde when she opens the ECB Forum in Sintra.
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