Markets Remain Bid into the Weekend – Nasdaq Up 1.45%
Global financial markets maintained their positive sentiment into the weekend with the major US indices experiencing strong days again on Friday. The Nasdaq led the way again, closing the day up 1.45% with the S&P snapping on its heels, up 1.23% and the Dow lagging at 0.84%. The dollar saw some profit-taking as it failed to make further ground on the last few days appreciation, the Euro climbing 0.4% and the Pound 0.7% and US Treasury yields closed close to flat on the day with the benchmark 10-year sitting at 3.84% into the weekend.
The First Day of the Rest of the Year
There is no doubt that not many predicted this kind of market strength at this stage of the year back on January 1st and it will be a very surprising market if this kind of momentum continues throughout the second half of the year. Fears of recession across the globe earlier in the year have largely been avoided, certainly to the extent that some predicted and equity markets have been driving higher. The signs of a more recessionary condition are still there, especially in interest rate markets, but stocks in particular have been able to ride the wave in the first six months. Investors are looking into the next six months with hope and not a little concern, central bankers over the last couple of weeks have been singing from a similar hymn sheet of ‘higher for longer rates’ and that may be setting some more alarm bells off. There are, as usual, well-reasoned arguments for both sides of the bull-and-bear argument but it does seem that most market participants are expecting more volatility not less in the second half of the year.
Quiet Start to a Busy Week
It’s a relatively quiet start to the trading week today with limited opportunities in terms of economic data releases. The Asian session’s focus will be on the Chinese Caixin Manufacturing PMI data as traders get another view on the state of the world’s second-biggest economy. The European day opens with the release of the Swiss CPI numbers with market expectation sitting at a 0.2% m/m increase.
Expect liquidity to be trading at a premium in the North American session as Canadians celebrate their national day and US trading desks have lower attendance as staff take an extra day ahead of Independence Day to create 4-day weekends. There is, however, still some major data due out of the states in the form of the ISM Manufacturing PMI numbers which could see some volatility enter what is otherwise expected to be a quiet session.
