Morning Note: A round-up of today's market news.
Market News
Gold surged toward $2,300 an ounce on Wednesday, extending its six-day rally, as investors welcomed Fed Powell’s recent remarks and evaluated the strength of the US economy and its implications for the Fed's policy stance. Powell indicated that a lower policy interest rate would likely be appropriate "at some point this year" if the economy develops as expected, heightening expectations for a Fed rate cut in June. Markets currently assign a nearly 63% probability of the regulator lowering the fed funds rate in that period. The dollar rose and the 10-year Treasury yield slipped to 4.35%.
Mohamed El-Erian believes exceptionalism is clear in the bond market. The divergence between key fixed-income benchmarks shows the US economy is on a healthier endogenous growth path compared with Europe. This outlook has implications for global investors beyond relative portfolio positioning.
US equity markets finished last night’s session in positive territory: S&P 500 (+0.1%), Nasdaq (+0.2%). In a change to its business model, Google is considering charging for AI powered search. The group’s traditional search engine would remain free of charge.
This morning in Asia, Japan’s Nikkei 225 rose by 0.8%, while Hong Kong and China were closed for holiday. Ray Dalio defended his decades-long investment in China and pledged he won’t abandon the nation in a LinkedIn post. That comes after his March 27 entry that warned Beijing should cut its debt and ease monetary policy or face “a lost decade”.
The FTSE 100 is currently trading 0.1% higher at 7,948. Companies trading ex-dividend include IHG (1.01%), Mondi (2.91%), IMI (1.06%), Rentokil (1.27%), and Smiths Group (0.83%). Sterling trades at $1.2659 and €1.1671.
The oil price trades at $89.15 a barrel. Exxon said its first-quarter earnings probably fell on lower oil and gas prices and reduced trading profits. Copper futures rose to the $4.20 per pound mark, the highest since April last year, helped in part by robust economic data from China.
Source: Bloomberg