US Markets Rally as Strait Opens Again – Nasdaq up 1.9%
US equity markets pushed higher overnight, with technology stocks leading the advance as investor sentiment continued to improve following the reopening of the Strait of Hormuz. The Nasdaq was the standout performer, rallying 1.91% to close at 26,517, while the S&P 500 gained 1.08% to finish at 7,500. The Dow Jones added a more modest 0.14%, ending the session at 51,564.
In bond markets, Treasury yields pulled back after Wednesday’s post-Federal Reserve rally, with the 2-year yield falling 0.8 basis points to 4.177% and the benchmark 10-year yield declining 3.4 basis points to 4.453%. Despite the retreat in yields, the US dollar continued to strengthen against the major currencies, with the Dollar Index climbing 0.72% to 100.81 with USDJPY notably volatile again.
Commodity markets were relatively subdued as shipping traffic through the Strait of Hormuz continued to normalise. Brent crude oil eased 0.19% to settle at $79.39 a barrel, while WTI crude slipped 0.25% to $76.60. Gold prices came under heavier pressure, falling 1.16% to $4,208.25 an ounce as the stronger US dollar weighed on the precious metal.
Dollar Hits Annual High After FOMC
The dollar index drove higher to hit its highest level in over a year just under 101.00 in trading yesterday. It rallied strongly against all the major currencies and is now poised to break into higher ranges on some of the key pairs. It broke to fresh highs again against the Yen, Cad and Swiss franc yesterday and is sitting close to crucial support levels in cable and the Euro, where it is trading slightly above the annual lows. Wednesdays hawkish update from the FOMC which now has markets pricing in at least one and possibly two rate hikes by the end of the year helped spur the move, but if key technical levels on the majors start to break in the coming sessions, especially in thinner conditions later today, then the move could start to pick up pace quickly.
A Quieter Trading Day Ahead to End the Week
Traders are expecting it to be a quieter end to the trading week today. With both China and the United States observing public holidays, trading conditions are likely to be thinner than usual, potentially increasing volatility should any fresh geopolitical headlines emerge. There is little scheduled on the calendar in the Asian session and the main event during the European session will be UK retail sales data with the market expecting a 0.5% month-on-month increase. Canadian retail sales figures are also scheduled for release shortly after the New York session starts with a 0.8% month-on-month increase expected there. With reduced liquidity across global markets, traders will be keeping a close eye on any developments that could influence sentiment heading into next week.
