Stock Markets Roller Coaster Continues
The investor roller coaster continued Friday as global stock indices continued to experience volatility in the wake of banking sector turmoil and central bank action. There was a sea of red across Asian and European bourses, but the US market bucked the trend at the end of another long week, with the major indices all managing to close higher, the Dow up 0.41%, the S&P up 0.56% and the Nasdaq up 0.3%. US markets were helped by Fed speakers all reassuring the market on the state of the banking system, and the dollar continued its recovery after its post-Fed drop. Treasurys held in recent ranges, and Gold finished slightly lower on the day.
Dollar Back in Favour – 0.5% up on Friday
The dollar took a bit of a beating last week after the Federal Reserves expected 25bps as currency markets focused on the potential end of the FOMC’s aggressive tightening cycle. However, the last couple of days of the trading week saw the greenback gain much of its lost ground back against the majors. Traders are now looking for the next catalyst for currency moves and in terms of interest rate differentials it looks to be a tough call in the short term as central banks look for certainty in the wake of recent banking sector issues. US data has been largely neglected over the last couple of weeks as greater concerns took precedence, however once again at the end of last week we saw two stronger prints, the weekly unemployment claims, and the PMI numbers – if we continue to see numbers all pointing to more inflation in the states, then expect the greenback to continue to strengthen.
Investor Concerns to Dominate Market This Week
It’s set to be a quiet week ahead in terms of economic data releases and except for the German IFO Business Climate numbers today there is very little scheduled to disturb the scorers. This should allow investors to evaluate the extreme volatility that we have experienced over the last few weeks and maybe start to look for a clearer picture to emerge. There are of course no guarantees on this and the potential for sharp, aggressive moves is still high, so expect traders to be heavily focused on the newswires as we move forwards to hopefully somewhat more positive market conditions.
