Monday Market Looks Good But Is the Volatility Truly Over?
by M. K. Matthews
The stock market has a short memory as Syria fatigue sets in and the U.S. markets rally on Monday morning. But is the volatility truly over?
Traders are breathing a sigh of relief that Russia hasn’t taken immediate counteraction to the U.S. and its allies, bombing what is believed to be a chemical manufacturing compound in Syria. But is it truly over? It’s worth noting that today Moscow lawmakers are set to discuss a draft law with countermeasures against the U.S.
Trump and Haley indicate there’s more to come.
Even though the U.S. Treasury ruled last week that no other country is manipulating its exchange rate, President Trump took to Twitter this morning to defy that ruling by saying Russia and China are playing a “currency devaluation game”.
Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!
— Donald J. Trump (@realDonaldTrump) April 16, 2018
It is worth noting that Trump’s renewed push against a currency war comes as central bankers and finance ministers prepare to meet in Washington for meetings of the International Monetary Fund (IMF).
On Sunday, Nikki Haley, U.S. Ambassador to the United Nations, announced more actions to follow in an appearance on Face The Nation, CBS. Nikki Haley replied when asked by Brennan, “Are there any consequences for Assad’s patrons Russia and Iran who continue to protect him?”
HALEY: Absolutely. So you will see that Russian sanctions will be coming down. Secretary Mnuchin will be announcing those on Monday if he hasn’t already and they will go directly to any sort of companies that were dealing with equipment related to Assad and chemical weapons use. And so I think everyone is going to feel it at this point. I think everyone knows that we sent a strong message and our hope is that they listen to it. (source)
Did you notice how “Iran” is dropped into the conversation?
Here’s what to watch
Bloomberg reported the main moves in markets:
- The S&P 500 Index gained 0.3 percent as of 9:43 a.m. New York time.
- The Stoxx Europe 600 Index decreased 0.3 percent
- The MSCI All-Country World Index rose less than 0.05 percent.
- The U.K.’s FTSE 100 Index decreased 0.5 percent to the lowest in a week on the largest dip in more than three weeks.
- The Bloomberg Dollar Spot Index declined 0.3 percent to the lowest in three weeks.
- The euro gained 0.5 percent to $1.2387, the strongest in almost three weeks.
- The British pound gained 0.6 percent to $1.4324, hitting the strongest in about 22 months.
- The Japanese yen advanced 0.1 percent to 107.27 per dollar.
- The yield on 10-year Treasuries increased three basis points to 2.86 percent, the highest in almost four weeks.
- Britain’s 10-year yield increased four basis points to 1.455 percent, the highest in almost four weeks.
- Germany’s 10-year yield jumped three basis points to 0.54 percent, the highest in almost four weeks on the largest surge in almost six weeks.
- Gold rose 0.1 percent to $1,345.46 an ounce.
- West Texas Intermediate crude dipped 0.9 percent to $66.79 a barrel, the first retreat in more than a week.
- LME aluminum gained 3.3 percent to $2,360.50 per metric ton, the highest in more than six years.
- LME copper climbed 0.5 percent to $6,863.00 per metric ton.
Keep on eye on the market’s response to any further action in the Middle East and to the currency war that seems to be gaining power.