Stocks Bounce Back After Tariffs Pulled – Dow up 1.2%
US and global equity markets bounced back strongly in overnight trading after President Trump pulled back on recent tariff threats, helping to ease risk sentiment. The Dow Jones surged 1.21% to 49,077, while the S&P 500 climbed 1.16% to 6,875 and the Nasdaq gained 1.18% to close at 23,224. In rates, US Treasury yields retreated from multi-month highs, with the 2-year yield falling 1.2 basis points to 3.585% and the 10-year easing 5.0 basis points to 4.243%. The pullback in yields offered some relief to risk assets, while the US dollar edged modestly higher, with the DXY index up 0.13% at 98.77. Oil prices pushed higher again as ongoing production issues in Kazakhstan continued to support prices, with Brent crude rising 0.60% to $65.31 and WTI also up 0.60% at $60.70. Gold pulled back from another intraday record just south of $4,900 as haven demand eased, but still finished the session higher, up 1.43% at $4,831.73 on the New York close.
Employment Data Key for the Rising Aussie
The Aussie reached a fresh year-to-date high at 0.6778 overnight and has been incredibly resilient to renewed geopolitical and trade tensions, rising by about 1.2% so far this week. Weaker sentiment towards the USD, the prospect of Reserve Bank of Australia (RBA) rate hikes, and high metals prices are underpinning the currency, and strong employment data later today could see it rise further in coming sessions. Market expectation is for the headline employment change data to show a rise of 28k jobs in the last month, with the Unemployment Rate creeping up to 4.4%, but anything better than this could see the AudUsd challenge those recent highs and push further north into the new year. Conversely, of course, weaker data could pull back expectations of near-term RBA rate hikes and see the pair fall back into recent ranges.
More Data and Geopolitics Ahead for Traders Today
Looking ahead, traders are bracing for further volatility as markets continue to adjust to geopolitical developments, while also turning their focus to key economic data due out across the sessions today. In the Asian session, Australian markets will come into sharp focus early in the day, with the Employment Change (exp +28k) and Unemployment Rate (exp 4.4%) numbers due out. There is little on the data front due during the London session today; however, traders will be closely monitoring their news wires for any further updates on potential European responses to tariff threats from the US. The New York session sees some top-tier data, which should get traders back focusing on fundamentals. First up, the latest US GDP numbers (exp +4.3% q/q) are due out alongside the Weekly Unemployment Claims (exp 209k) data, before later in the session we have the Fed’s favoured inflation indicator, the Core PCE Price Index (exp +0.2% m/m), released.
Later in the US session, attention will turn to US GDP and weekly jobless claims at 12:30 am AEST, followed by the closely watched Core PCE Price Index at 2:00 am AEST.
