XM Group presents a market wrap covering the recent surge in equities following a softer U.S. inflation report, gold’s climb amid geopolitical tensions, and copper reaching record highs due to Chinese stimulus efforts.
Stocks extend gains
Equity markets began the week on a high note after last week’s softer U.S. inflation report eased fears of a Fed rate hike. Despite the optimistic data, several FOMC members continue to signal a ‘higher for longer’ stance, with some even considering further rate hikes. Year-end rate cut expectations have dropped to around 40 basis points from over 50.
Numerous Fed speakers are scheduled this week, with Governor Waller’s remarks in focus today. This busy lineup could overshadow Wednesday’s FOMC minutes. Wall Street futures point to more gains, following the Dow Jones closing at a record high on Friday.
Copper rallies on China stimulus
European and Asian markets rose on Monday, buoyed by hopes of rate cuts and increased stimulus efforts from Chinese authorities to support their property market. Copper prices have surged, with COMEX futures hitting an all-time high of $5.1985 per pound. Precious metals like silver and gold have also rallied, driven by different factors.
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Oil and gold up on Middle East risks
Geopolitical tensions and strong central bank demand have pushed gold above $2,400 per ounce. Reports of Iran’s president dying in a helicopter crash and Saudi Arabia’s crown prince canceling a trip due to King Salman’s health have added to the uncertainties, slightly lifting oil futures. Despite speculation about Israeli involvement in the incident, there is no widespread panic.
Yen underperforms
In FX markets, major pairs are consolidating gains following the US dollar’s decline. The euro’s focus will be on Thursday’s flash PMIs, while Wednesday’s CPI data could influence a BoE rate cut for the pound. The yen remains steady around the 155 level, despite Japan’s 10-year yield nearing 1% for the first time since 2013.
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