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US stock traders finally wore out the sell button last Friday and instead switched to a not-so-subtle round of dip buying. Much as they were on the way down, tech stocks were the largest movers on the way back up, raising the Nasdaq Comp and S&P 500 by 2.6% and 2.1% respectively. The Dow, which avoided slipping into correction by the skin of its teeth, managed a more modest 1.65% gain on the day. The bullish sentiment carried over to Asian markets this morning, prompting a sizeable gap up in the Nikkei 225 and a number of other stock markets in the region. That said, US futures were down again on Sunday night, so how long the jubilation lasts is anyone’s guess.
Trade concerns have not been kind to the Dollar, manifesting in simply awful price action for the world’s reserve currency since mid-January. The Greenback finally dug its heels in last week however and for now appears to be reassessing its trajectory. No less than four central banks have scheduled interest rate decisions this week, so currency traders had better keep their wits about them. The Bank of Japan kicks things off in the early hours of Wednesday morning, followed by the Fed later in the day. Thursday cedes the stage to the Swiss National Bank and the Bank of England. Of the four, only the Swiss Franc is expected to undergo a rate change, to 0.25% from 0.5% currently. Despite there being almost zero chance of the Fed cutting rates this week, the accompanying statements will be painstakingly scrutinised for any possible change in sentiment among board members.
As enthralling as central bank manoeuvrings are, attentions are firmly turned towards precious metals. Last Friday, gold achieved the historic milestone of $3,000 per ounce. A staggering feat considering the price was only $2,000 in February last year and just $2,600 at the start of January. Should uncertainties surrounding tariffs dissipate and trade agreements solidify, it will be interesting to see whether safe-haven flows continue to pour into precious metals. Another interesting point is the fact that Bitcoin – so-called digital gold – has utterly failed to capture these same flows.
Central bank decisions aside, there are a number of events on the economic calendar to look out for over the coming week. US retail sales are the first item on the menu later today, followed by a slew of data relating to the American housing market on Tuesday. UK and Australian employment data may cause a minor stir on Thursday, before Japanese inflation and Canadian retail sales conclude the week’s proceedings on Friday.
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