Global Markets Hold Steady as Gold Hits Record Highs

Global financial markets and gold price rally illustration

The S&P 500 rose +0.4% to 6,671, as the Dow Jones -0.04% closed nearly flat. The Nasdaq lifted +0.66% while the Russell 2000 continued to lead the benchmarks with a gain of +0.97%. Morgan Stanley hit a record high, while Bank of America rose nearly +4.4% after beating Wall Street estimates. This week’s bank results indicate strength for major US companies as the third-quarter earnings season gets underway, pointing to resilience in the US economy. Meanwhile, the blackout on official economic statistics continues amidst the government shutdown. The VIX fell 2% to 20.

Equities are showing signs of fatigue following one of the best six-month rallies since the 1950s. While the market looks in need of a corrective reset, there are few catalysts given the pending Fed rate cuts and earnings season, which have so far beaten expectations. The principal risk at this juncture centres around China/US trade negotiations and whether the dispute escalates or not. However, there seems to be a willingness on both sides to find a resolution.

US Treasury Secretary Scott Bessent told CNBC that Washington did not want to escalate a trade conflict with China, emphasising that DJT is ready to meet Chinese President Xi Jinping in South Korea later this month. Still, the trade dispute is far from resolved. On Tuesday, Trump said Washington was considering cutting some trade ties with China, while both countries began imposing reciprocal port fees on Wednesday.

The bond market came for sale, with yields edging higher across the curve. The US2yr rose 2bps to 3.5%. The yield on the US10yr and 30yr rose only marginally, with both bonds settling at 4.04% and 4.63%. This followed a well-bid bond auction in Japan where long-dated yields declined sharply – a good outcome. Japan’s first sale of government debt since the ruling political coalition crumbled drew firm demand. In Europe, French bonds surged on optimism that budget concessions made by Prime Minister Sebastien Lecornu will help avert a deeper crisis. Meanwhile, Scott Bessent said three to four Federal Reserve Chief candidates were ready for selection, with DJT set to interview sometime after the Thanksgiving holiday.

Fed Governor Stephen Miran told CNBC that “two more cuts this year sound realistic,” noting that the labour market has clearly weakened. This follows comments on Tuesday from Jerome Powell left the door open to rate cuts this week and said the Fed is considering plans to halt quantitative tightening, which shrinks the Fed balance sheet and tightens monetary conditions. Markets are pricing a near-certain cut at the end of October. The US dollar index fell 0.3% to 98.7, with all the major currencies firmer.

Commodities were mixed. Gold made a new record high, rising 1.5% to $4220oz. Silver surged +3% to $53 with platinum and palladium both gaining 1%. Comex copper eased 1% to $4.99 as LME copper retreated 2% from near record highs to $10,728/ton. Oil prices weakened modestly, with WTI trading around $58.60. Soft ag was mixed. Iron ore was steady at $105/ton. Bitcoin eased 2% to $111.3k.

The ASX200 rallied +1.03% on Wednesday to close at 8,990, marking the strongest session in a couple of weeks, following Jerome Powell’s dovish comments and strong earnings from major US banks lifted sentiment locally. Gains were widespread, and whenever we get the financials and materials sectors rising on the same day, the odds are good for a decent rise in the benchmark index. The ASX200 is within 30 points of the August record high following a correction of c4%. There were no major local economic releases, though traders kept an eye on Chinese inflation data. The Australian dollar strengthened to US65.1c. SPI futures are pointing to a flat start on the open.

A$ spot gold made a new record high near $6500oz. US ETFs were well bid on Wednesday, pointing to another strong session today for Australian gold miners. (Read our gold sector report here)

Australian Gold Price Technical Chart

Carpe Diem

 

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ASX- Listed Australian Stocks:
29M.AU, ANN.AU, ANZ.AU, BPT.AU, BWP.AU, CKF.AU, CBA.AU, EVN.AU, FID.AU, FMG.AU, GOR.AU, GMG.AU, GNC.AU, HUB.AU, ILU.AU, IGO.AU, JHX.AU, MGR.AU, NAB.AU, PAR.AU, QBE.AU, RRL.AU, S32.AU, SBM.AU, TLS.AU, TUA.AU, WES.AU, WBC.AU, WHC.AU, XRO.AUX, AGL.AX, AMC.AX, BHP.AX, CSL.AX, DMP.AX, GDG.AX, WIRE.AX, ATOM.AX, MQG.AX, NIC.AX, NST.AX, ORI.AX, PDN.AX, RMS.AX, RPL.AX, SFR.AX, STO.AX, SUN.AX, VAU.AX, WTC.AX, WDS.AX, GMD.AX, CSC.AX, RIO.AX, GTK.AX, SPK.AX & NEM.AX

International Stocks:
BIDU.CN, 9888.CN, 1211.CN, 268.CN, 3690.HK, 1818.HK, 9618.CN, ENX.FR, BT.A.GB, GENI.GB, FRES.GB, 9988.HK, 2282.HK, 700.HK, 1128.HK, 1876.HK, 8750, 7011.T, 8306.JP, 8031.T, 8411.T, 3994.T, 7974.T, 8604.JP, 8308, 6758.JP, 8316.JP, 8331.T, JP.8308, HEM.SE, GRAB.SG, BABA.K, GOOG.US, AAPL.US, CDE.US, CPNG.K, FLTRF.L, SIL, URA, BZ.O, MSFT.US, SBSW.K, 2840.HK, TME, GDX, GDXJ.US, YUMC.K, Z.O, IMPUY & ANGPY