Equity markets continue to rise, with stocks in Europe, Asia and the US (in pre-market trading) extending last week's rally as traders are increasingly confident that the Fed will see conditions later this year that will allow interest rate cuts.
Trading volumes are light to start the week as key markets (UK, Japan) are/remained closed today as well. We see the S&P 500 0.4% higher in pre-market US trading. Apple is weighing slightly on Wall Street after last week's strong gains after Berkshire Hathaway reduced its massive stake.
We also see bond yields continuing to fall, with German 10-year yields in particular falling sharply. The lower yields show that confidence is rising that the major central banks are on track to ease the current tight monetary conditions.
The JPY weakened again after a strong week in which the Japanese currency was supported by (probably massive) Japanese intervention measures.
We see a quiet start to the week in terms of economic data. The markets will be influenced by the representatives of the central banks. The ECB's chief economist, Philip Lane, said in an interview that the latest data has made him more confident that inflation will return to the 2% target. In fact, some economies in the Eurozone have already reached or are approaching the target, making a first rate cut in June or July likely. New York Fed President John Williams and Thomas Barkin of the Richmond Fed will comment on current conditions and Fed monetary policy on Monday, followed by Neel Kashkari of Minneapolis on Tuesday.
In a rather quiet week overall, the current risk-on sentiment can be maintained, especially on Monday. The focus will be on the US inflation data for April at the end of the week.
The markets in Europe were also boosted by strong gains in Chinese equities in particular. Mainland Chinese stocks led the gains as mainland markets recovered after a holiday break.
Oil prices rose after Saudi Arabia raised prices for customers in Asia. Positive market sentiment, a weaker USD, hopes of upcoming interest rate cuts and signs of a possible renewed escalation of the situation in Gaza are also supporting oil prices (as well as gold).
👁 ROB'S MARKET OVERVIEW:
May 06, 2024
🌐/🇺🇸 Global Markets ↗️/➡️
Cyclical / Luxury Stocks ↗️
Tech/Growth Stocks ↗️
Financial Stocks ↗️/➡️
Defensive Stocks ➡️
Energy Stocks ↗️ (recovering after recent sell-off)
Materials Stocks ↗️
💱 Forex
AUD, GBP ↗️
EUR, CAD ↗️/➡️
CHF ➡️
USD, JPY ↘️/➡️
⚒ Commodity Markets ↗️
Oil prices ↗️
Natural Gas prices ↗️
Metal prices ↗️/➡️
Gold ↗️/➡️ (benefiting from sliding yields / weaker USD / concerns about Gaza)
⚡️Cryptos ↗️/↕️ (benefiting strongly from risk-on mood / expectations of rate cuts)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
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