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A collective sigh of relief swept over Wall Street last Friday as the latest Non-Farm Payroll report once again exceeded expectations. The US economy added 177k new jobs in April, beating the predicted figure of 130k, while unemployment held steady at 4.2%. The number of new jobs created in March was revised to the downside, bringing the previous month’s figure down to 185k, still beating expectations of the time. The data print allowed US indices to continue their ascent, with the Dow, S&P 500 and Nasdaq Comp all adding around 1.5% to their valuations. The latter two indices have now fully recovered from the post “liberation day” dump. In all likelihood, the jobs report will do little to convince the Fed to move the needle on interest rates during the meeting on Wednesday. Trump famously called out Jerome Powell recently for not bringing down interest rates sooner, but the two main remits of the Fed are employment and inflation, both of which have displayed promising results over the past few months. The interest rate prediction market is all but convinced that the Fed will not budge this week. The same cannot be said for the Bank of England, which is expected to bring down rates on the Pound Sterling on Thursday, from 4.5% currently to 4.25%. Said interest rate decisions are the only real events of substance in an otherwise very dull economic calendar this week. Today promises to be extra boring given the market closures in the UK and across Asia. In the absence of much else going on, there is a chance that the conversation will once again shift back to the fascinating topic of trade tariffs, but another developing story is the drama unfolding in the oil markets. OPEC+ has decided to accelerate production hikes despite dismal global demand forecasts, pointing to the group’s willingness to tolerate lower oil prices. A nightmare scenario for oil bulls, who collectively threw in the towel this morning, with Brent Crude collapsing to $59 a barrel and WTI falling to just $56. In other news, Warren Buffett announced on Saturday that he plans to step down as CEO of Berkshire Hathaway (BRK.A, BRK.B) by the end of the year, ceding his position to vice-chairman Greg Abel. Buffett, who turns 95 this year, has presided over Berkshire Hathaway since 1970. Shares in the company have risen over 18% already this year.
Markets have shifted back towards a risk-on environment over the last few days. The panic surrounding tariffs continues to abate and US stocks have enjoyed decent rallies as a result. The S&P 500 and Dow Jones have now closed higher over the past eight consecutive sessions, while the Nasdaq Composite rallied strongly yesterday following better-than-expected earnings reports from major tech companies. Microsoft (MSFT) surged a whopping 7.6% on Thursday after smashing earnings estimates. Both Apple (AAPL) and Meta (META) also had good news to report on their ends, causing sighs of relief in the wider technology sector. The latest PCE price index also provided grounds for optimism, falling largely in line with predictions and showing continued decreases in inflation. Q1 GDP came in far lower than expected, pointing to a 0.3% contraction in the US economy, but the fall is explained by the sharp increase in imports ahead of the new tariff regime, skewing the trade balance element of the calculation. The ADP employment numbers made for dire reading however, coming in at half the expected figures. It remains to be seen if the Non-Farm Payrolls later today confirm the fall in employment. Current predictions are for 130k new jobs, so a bad miss may provoke some measure of volatility this afternoon. Gold completed its third daily close in the red yesterday, this time ending the day at $3,238 an ounce. The precious metal is now down 7% from record highs. The Dollar on the other hand continued to push higher, finally dragging the DXY back above 100. Crypto markets pushed modestly higher yesterday, with Bitcoin rising to $97k and edging ever closer to the six-figure psychological barrier, a threshold lost back in February.
Markets have been a little calmer so far this week. By and large, stock markets around the world have enjoyed modest gains over the past couple of sessions, as many large US companies prepare to report their latest quarterly earnings. Microsoft (MSFT) and Meta (META) will release their respective reports later today, although only after market hours. Starbucks (SBU) plummeted as much as 6.7% in after-hours trading yesterday after the coffee company revealed slumping store sales. A mixed bag for tech stocks so far, with Super Micro Computer (SMCI) falling 15% after poor results, while Seagate (STX) jumped 9% after beating Q1 sales estimates. Currencies have recovered some demeanour in recent sessions, extreme swings appear to be out of fashion for the time being and the volatility has died down somewhat. Even cryptocurrencies aren’t interested in drama anymore, Bitcoin has been flat as a pancake for the past week already and is currently showing no inclination of going anywhere. Gold has also been relatively stable after coming down from last Tuesday’s record high and is now hovering above $3,300 an ounce. Dull trading conditions all round. Famous last words perhaps, as the economic calendar really perks up later today. The latest ADP employment figures are sure to raise some eyebrows, as will first quarter GDP growth, but the main event of the day will be the PCE Price Index, which is predicted to reveal lower inflation across the board. Markets may slow down a little tomorrow as much of the world takes the day off for Labour Day. Friday raises the stakes once again however with the latest round of NFP data. Enjoy the calm while it lasts.
Far too early to call with any real degree of conviction but the Dollar finally appeared to make a stand last week. The DXY briefly reached all the way down below 98 before managing to climb back up to a respectable weekly close in the green. Recent developments have not been kind to the Greenback, to put it mildly. The Euro is now at its strongest versus the Dollar in three years, while safe-haven currencies such as the Swiss Franc are at their highest levels in well over a decade. Pick any currency from the menu and chances are the Dollar is currently facing yearly lows against it. On the other side of the equation, gold has thrived so far this year, culminating in yet another record high last week. The precious metal tapped $3,500 an ounce last Tuesday, which is all the more insane given that prices were a mere $2,600 just four months ago. The jubilation was sadly short-lived, as subsequent profit-taking dragged gold down to a weekly close in the red, painting a nasty looking candle along the way. The uncertainty surrounding tariffs continues to be the main driver behind market sentiment but the fog of war may finally be starting to clear. New trade deals will take time to establish but early signs are allowing some investors to be cautiously optimistic. All three major US indices closed in the green last week, with the S&P 500 and Nasdaq Composite in particular gaining 4.6% and 6.7% respectively. Stock markets in Europe and Asia also continued to display positive momentum, with the former having all but shrugged off the recent selling spree. Fundamentals will once again have their part to play this coming week, which is a big one in terms of economic data and company earnings. No fewer than 180 companies within the S&P 500 are set to publish their quarterly earnings this week, including the likes of Apple (AAPL), Amazon (AMZN), Meta (META), Microsoft (MSFT) and many more. The economic calendar also has a lot to offer starting on Wednesday with the latest PCE Price Index, which is expected to show significant drops in inflation figures. ADP employment numbers will also drop on the same day, but traders will already have their eye on the more impactful Non-Farm Payrolls later in the week. Last month’s figures wildly surpassed expectations so it will be interesting to see if there are any revisions to the previous publication or if the April figures show the same trend. Of course, any news relating to the ongoing tariff situation has the potential to move markets at any time, as will any developments concerning Ukraine for that matter. Busy week ahead.
The hysteria pervading financial markets has dissipated somewhat over the past few days. US stock indices have enjoyed three consecutive days of gains and the same is true for many European markets, which have all but fully recovered from the tariff fear induced selloff. The latter half of the week has provided grounds for optimism with regards to establishing new trade agreements between the US and various parts of the world. Treasury Secretary Scott Bessent, who had previously urged countries to come forward “with their A game”, announced yesterday that South Korea had done just that, stating that a trade deal was moving along quickly. While some parts of the world are eager to re-establish strong trading arrangements, the US and China remain stubbornly at odds. Economic data from the United States continues to send out mixed signals. Data published on Wednesday revealed that the manufacturing PMI rose to 50.7 in April, beating expectations of just 49 and indicating that the sector remains in expansion. Services on the other hand fell to 51.4 versus expectations of 52.5, also showing a sector in expansion despite the slowdown. The question of the Dollar is still a confusing one. The next Fed decision is now less than two weeks away and market participants appear increasingly unwilling to predict the outcome of the meeting. Gold may also be debating its place in the rapidly evolving financial landscape. The precious metal is now a sizeable step away from Tuesday’s record high, awaiting the next geopolitical catalyst before deciding on its next move. It is much the same for markets at large, scheduled events have been pushed to the side for now and traders will have to maintain a wait-and-see approach.
The latest Fed vs Trump narrative pushed gold all the way to $3,500 an ounce on Tuesday. Markets seemed to be under the assumption that the US president was moments away from dissolving the entire organisation, but alas it was not to be. Late last night, Donald Trump made it clear he had “no intention of firing him”, referring to Fed Chair Jerome Powell. Gold dropped significantly following the statement and is now struggling to pick a path this morning. The volatility in precious metals extended to currencies, resulting in erratic movements across all major pairs. The Dollar gained on the latest developments, in particular detriment to the Swiss Franc, which fell a massive 1.9% against the Greenback yesterday. Despite the recent show of strength, the DXY remains below 100 and the Dollar is still near multi-year lows. Just as with gold, currencies cannot seem to commit to one direction or another so far today. Fundamentals matter very little in the current environment and for the time being financial markets remain at the mercy of the Whitehouse. For once, this suited cryptocurrencies, which were thrilled to witness the new SEC chairman Paul Atkins sworn in on Monday. Trump stated that Atkins was “the perfect man” to lead the SEC, adding that crypto markets were desperate for “regulatory certainty and clear rules of the road”. The previous SEC chairman, Gary Gensler, had been notoriously hostile towards the fledgling industry. The new appointment is unanimously viewed as a move in the right direction. Bitcoin blasted all the way to $94k late last night and the broader crypto sphere is now catching up. Far too early to call for alt season, but it is refreshing to see some optimism for once.
