Global equity markets started the week with a quiet Monday near record highs, although a sharp rise in commodity prices, with even copper and gold hitting new record highs, could potentially have inflationary implications.
Stocks in Asia, Europe and Wall Street futures are trading slightly higher. The economic calendar is almost empty today and there are no major events for the US market tomorrow either. The main focus will be on the latest mega-cap earnings report on Wednesday (from Nvidia). Nvidia has been the biggest driver of the S&P 500 and Nasdaq 100 this year and we see Nvidia continuing to make gains in pre-market trading (currently up 1.5%) and other chip stocks are also trading higher.
In Europe, stocks have been boosted by strong gains in mining and technology stocks. The Stoxx Europe 600 Index is trading near record highs
The price of copper rose to its highest level ever and futures on the London Metal Exchange topped 11,000 for the first time, which also pushed up the prices of other metals, including precious metals. Gold surpassed its previous high from April. The death of Iranian President Ebrahim Raisi in a helicopter also fueled uncertainty in the Middle East and may have also played a role in gold's gains. On the other hand, oil prices remained stable, suggesting that the helicopter crash, which also killed Iranian Foreign Minister Hossein Amirabdollahian, had a more moderate impact.
Despite the strong gains in commodities, investors are generally optimistic that price pressures will continue to ease and that the US Federal Reserve, the European Central Bank and others will be able to cut interest rates in the coming months.
The Dow Jones closed above 40,000 points for the first time on Friday, while the S&P 500 hit a series of record highs. We are seeing analysts at the major US investment banks becoming more bullish again – even prominent bear strategist and analyst Michael Wilson of Morgan Stanley is now positive on the market (he's late to the party) and is predicting further gains. Wilson is no longer bearish on equities. With more and more institutional traders/investment banks now joining the bulls, we see further short-term upside potential.
A stable USD with stable yields also helps the US growth sector. Rather hawkish comments from Fed officials remain a risk – but have increasingly less impact after Fed officials, including Fed Presidents Loretta Mester, John Williams and Thomas Barkin, have said that inflation remains stubborn and more time and data is needed. More speeches from Fed officials (Barr, Waller, Jefferson) will follow today.
Wall Street's strong finish last week will support risk sentiment / equities today, with few headwinds. We will see a quiet start to the week, with low volatility outside of commodities and low trading volume.
👁 ROB'S MARKET OVERVIEW:
May 20, 2024
🌐/🇺🇸 Global Markets ↗️/➡️/↗️ (slight gains with some profit taking with futures / stocks near ATHs)
Cyclical / Luxury Stocks ↗️/➡️
Tech/Growth Stocks ↗️/➡️/↗️
Financial Stocks ↗️/➡️
Defensive Stocks ➡️
Energy Stocks ➡️
Materials Stocks ↗️
💱 Forex
USD ↗️/➡️ (trimming some but not all of last weeks losses; strong rebound unlikely for now)
GBP ↗️/➡️
EUR, CHF, CAD ➡️
AUD ↘️/➡️
JPY ↘️/➡️ (yen remains bearish, gradually weakening further)
⚒ Commodity Markets ↗️/↕️
Oil prices ↘️/➡️
Natural Gas prices ↗️/↕️
Metal prices ↕️
Gold ↗️/↘️/↗️ (volatile after sharp profit taking at $2,450 but overall remaining supported)
⚡️Cryptos ➡️/↗️ (remaining slightly bullish – BTC trying to move away from $67K but will hover at that level for a bit longer)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
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