Stocks continue to recover from Tuesday's slump after strong US economic data initially further reduced expectations that the Fed will cut interest rates in the current quarter and three times in total. Recent data also suggests that the labor market remains tight and companies continue to have many job openings and are struggling to fill them.
However, initial jobless claims in the US reported a few minutes ago now show a more mixed picture of the US labor market again, as initial jobless claims in the US rose last week to their highest level since January, which is in line with the recent increase in the number of job cuts. Initial jobless claims rose by 9,000 to 221,000, also above expectations of 214,000, but continuing jobless claims were down slightly from February. The main focus will be on tomorrow's NFP report, while today's moves will remain muted as traders prepare for Friday's jobs report.
After several warnings from investment banks that valuations on Wall Street are very high, investors have become more nervous that markets could come under pressure – especially if interest rates remain high for longer. Powell softened these concerns somewhat after saying that the latest inflation figures – although higher than expected – have not “materially changed” the overall picture.
We see yields moving lower after the initial jobless claims data and markets continuing to rise as expected. Risk sentiment has improved and markets in Japan and Europe have also rallied. The strong USD gave back some of its recent strong gains and concerns that the US Treasury bond slump (which pushed yields to 2024 highs) could intensify have eased significantly.
The NFP report has been unreliable of late as the previous month's data is usually adjusted (downwards). It is therefore difficult to gauge how the markets will react and how reliable the NFP data is. I expect a mixed, initially slightly negative reaction, but the markets will return to an overall positive market sentiment next week. We are already seeing some investors ease their concerns that higher interest rates will cause a significant slowdown in the US economy for an extended period of time. In addition, I continue to see good enough conditions for the US economy and strong evidence that growth, and therefore the overall positive momentum, remains intact – the US economy does not yet need interest rate cuts.
The improving sentiment is weighing a little on gold, but the outlook remains bullish. The oil price has stabilized after recent strong gains – a sign that commodity traders expect demand to rise as the global economy (especially China's economy) improves.
👁 ROB'S MARKET OVERVIEW:
April 04, 2024
🌐/🇺🇸 Global Markets ↗️/➡️ (more caution in second half of US trading)
Cyclical / Luxury Stocks ↗️/➡️
Tech/Growth Stocks ↗️
Financial Stocks ↗️/➡️
Defensive Stocks ➡️
Energy Stocks ➡️
Materials Stocks ↗️/➡️
💱 Forex
AUD ↗️ (benefiting from improved risk sentiment; bullish commodity prices)
CAD ↗️/➡️ (benefiting from improved risk sentiment; bullish commodity prices)
EUR ↗️/➡️ (benefiting from markets still optimistic about Fed rate cuts)
GBP ➡️/↘️
USD ↘️/➡️ (USD to stabilize / edge higher in second half of US trading)
CHF, JPY ↘️
⚒ Commodity Markets ➡️
Oil prices ➡️ (hovering for now at $85 (WTI); $89 (Brent))
Natural Gas prices ➡️/↘️ (in sideways movement with some risk of short-term profit taking)
Metal prices ↘️/↕️ (some profit taking but overall remaining bullish on improving risk sentiment)
Gold ↘️/↕️/↗️ (remains bullish; slight headwinds on temp. lower safe haven demand)
⚡️Cryptos ↕️/↗️ (signs of short-term recovering from sharp losses)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
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