US equities and gold in particular received a boost after US PCE data – the Fed's preferred measure of inflation – came in line with expectations on Friday, reinforcing hopes that the Fed will cut interest rates this year.
The S&P 500 traded slightly higher (+0.3%) but showed little movement overall in pre-market trading in the US – partly because markets in Europe, Australia and Hong Kong were closed for the Easter holiday. The gold price briefly exceeded the $2,265 mark and then moved back towards $2,250. I continue to see considerable medium-term upside potential for gold.
The USD fell slightly after the PCE data, but quickly found support again as the markets still see other central banks – especially the ECB and BoE – closer to rate cuts than the Fed.
The upward trend that has driven equity markets to record highs this year remains intact, also supported by continued strong consumer spending. The core Personal Consumption Expenditure (PCE) index, which excludes the volatile food and energy components, rose 0.3% month-on-month, weakening after a surprisingly strong January. Year-on-year, PCE rose by 2.8%, which is still above the Fed's inflation target of 2%.
Voices from within the Fed, including Fed Chair Jerome Powell, are reiterating (as we predicted) that the Fed is in no hurry to cut rates as policymakers await further evidence that inflation is moving back towards the 2% target.
Headwinds for Bitcoin – which fell below the $70K mark again – are offset by continued gains in China. An upturn in the manufacturing sector – in addition to recent positive Chinese data – fueled hopes that China's economic recovery could gain momentum. Although this is currently underappreciated as the last few months have been buoyed by a strong US economy, greater optimism about China's return to growth could help maintain optimism for a continuation of the global equity market rally.
I expect little movement today, but still see optimism prevailing in New York. Despite a stronger USD, oil prices also continue to rise – partly because geopolitical tensions continue to provide a tailwind, but also due to expectations that global oil demand will recover or continue to rise in the coming months – also due to greater demand from China or expectations that the Chinese economy will soon be able to “catch up” again.
👁 ROB'S MARKET OVERVIEW:
April 01, 2024
🌐/🇺🇸 Global Markets ➡️/↗️ (positive momentum returns; new ATHs in sight)
Cyclical / Luxury Stocks ➡️/↗️
Tech/Growth Stocks ↗️/➡️/↗️
Financial Stocks ↗️/➡️
Defensive Stocks ➡️
Energy Stocks ↗️/➡️ (remains bullish)
Materials Stocks ↗️ (benefitting from general / China optimism)
💱 Forex
USD ➡️/↗️ (remains supported by expectations that Fed less dovish than other central banks)
GBP, AUD ➡️
EUR, CHF, JPY ➡️/↘️
CAD ↘️/➡️
⚒ Commodity Markets ↕️/↗️
Oil prices ↘️/↗️ (remains bullish)
Natural Gas prices ↗️/↕️
Metal prices ↕️
Gold ↕️/↗️ (remains bullish; will hover for a while near $2,250)
⚡️Cryptos ↕️/↗️ (saw some selling but seems to continue to hover near $70K)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
