Once again, the market is showing mixed reactions to controversial political moves. The latest Federal Reserve meeting has put the dollar in a tailspin. As rate hikes seem imminent, the effects of this bold move can also be seen on stocks. While the dollar is falling, US stocks are treading carefully. They rose slightly, but no major moves will be made until the Feds make an official announcement. Commodities soared as the international glut diminishes. French bonds joined US bonds on the path to recovery, after a pact was made between their presidential candidates.
Market Wraps Amidst Landmark Political Decisions
It appears that the global rally is steadily coming to an end. Growing uncertainty about Trump & the Fed’s inevitable rate hikes are making investors think twice. The Feds are confident that rate hikes can be made without inciting inflation, so it’s only a matter of time. At the height of the rally, the MSCI All-Country World Index surpassed $70 trillion. As time passes, it will be increasingly harder to maintain those numbers in the current political state. Investors are holding their breath as Trump’s administration prepares fiscal stimulus plans that cater to a rising dollar.
Even though the dollar is cringing at the thought of higher rates, stocks are staying steady. The S&P 500 Index closed with a 0.1% raise, while the Dow Jones Industrial Average rose 0.12%. These small gains reflect a market that’s steeped in uncertainty. Stocks are staying unbiased, but that might not last for long.
In Europe, another political showdown is stealing the show. France is in the middle of a heated presidential election, & many fear that they will leave the European Union. If France did pull out, it could signify the end of the European Union. This would undoubtedly be disastrous, so sudden measures have been made to quell the growing hysteria. Independent candidate Emmanuel Macron & centrist candidate Francois Bayrou have come together to create a pact. It guarantees that if either wins, France will stay in the union. This bold move restored faith in French bonds, propelling them to new heights.
Once the pact was official, the optimism spread to European stocks & currencies. The Europe 600 index rose 0.13%, suddenly pulling out of a certain drop. Defying critics, the euro managed to achieve a 0.2% raise. This put it at $1.0581, which exceeded expectations.
While other markets are experiencing conflicted reports, commodities are at an all time high. An illuminating industry report propelled oil to a 7 week high. The report showed that U.S. stockpiles are falling, signaling that the horrific glut is finally coming to an end. West Texas Intermediate reported 2% gains, leaving crude at $54.65 a barrel. Not to be outdone, gold took advantage of investors’ reactions to the Fed’s future rate hikes. It added 0.9%, putting gold at $1,248.50 an ounce. U.S. natural gas enjoyed a 1.4% gain, extending a daring rebound off a 6-month low.
All these factors are showcasing the market’s resilience to political unrest. Investors are treading carefully, but the time is ripe for a rebound. The global rally many have lost wind, but it’s poised to hold its ground.