Stock markets look set to start the new week on the front foot after the US markets closed strongly on Friday. The S&P experienced its best week since last November, it closed on Friday up 0.5% but was beaten on the day by both the Nasdaq and the Dow, finishing up 0.76% and 0.54% respectively. The dollar continued to ease as the risk environment improved with the Dxy trading around 96.50 on the Sydney open this morning. Commodities also closed the week well with Oil remaining bid, WTI at $58.5/b and Brent around $67/b, Gold finished at 1302 after bouncing off of lows around 1295 during Fridays trading.
Markets largely interpreted no fresh news as good news during the course of last weeks trading and positive sentiment managed to clear the few pitfalls that were placed in its way. Brexit will remain a major issue as this week continues with yet another vote due in parliament on Theresa Mays proposed exit deal. Sterling has remained strong with cable trading up near 1.3300 and EurGbp just north of 0.8500, however given the extent of the political machinations around the issue and the fact that at the moment the deadline is still March 29 we could see more volatility across the currency in the coming days. The Bank of England’s latest rate meeting is later in the week but given the volatility around Brexit expect them to remain firmly on hold. The other major focus for the week will be the FOMC meeting with the rate announcement, statement and press conference all coming late in the day on Wednesday. Expectations are for a continuation of the ‘pause policy’ but all dialogue will be closely monitored as usual and expect some gyrations in the market around the event.
Looking ahead to todays trading and it is set to be a quiet start to the week in terms of fundamental data releases, there are no tier 1 data releases due throughout the trading day and therefore expect investors to focus on the major sentiment drivers for any change of direction or momentum. Investors will continue to look to China and the US for any update on the proposed trade deal there and any signs that a meeting of the two presidents is likely will help with the positive mood.