US Market Resurgence Bolstered by Tesla's Performance
This year, the US market witnessed impressive highs, with stocks projected to secure weekly gains. The possibility of the Federal Reserve holding off on a rate hike next week dispelled concerns about a potential cash crunch in the US markets. Boosted by a 5.7% leap in Tesla's stocks, the S&P 500 ascended to heights not seen since August, although it later plateaued by mid-day. The Nasdaq Composite and the Dow Jones Industrial Average mirrored this pattern.
Mixed Picture in European and Asian Markets
In contrast, the European STOXX 600 index recorded a minor decline of 0.13%. However, excluding Japan, MSCI's broadest index of Asia-Pacific shares surged by 0.74% overnight. When factoring in Wall Street's gains, the global stock index indicated a moderate increase of 0.14%, approaching a 13-month peak. The index could report a 0.4% hike for the week.
Signs of a Bull Market Despite Fed Uncertainty
The S&P 500's rebound signified the return of a bull market, observed Arthur Hogan from Briley Wealth. While a 20% rise from a low generally signifies a bull market, market interpretations may vary. However, an aggressive move by the Fed could destabilize the market.
The Odds of a Fed Pause Amid Economic Indicators
The chances of the Fed maintaining a steady rate on June 14 sit at 73%, providing a break from the most rigorous hiking cycle since the 80s. The push for a pause was reinforced by data revealing a spike in new jobless claims in America, signaling a slackening labor market that could dampen inflation.
Impact of US Debt Ceiling Negotiations on Market Liquidity
Investors hope for a halt in Fed's rate hikes was also fueled by potential liquidity issues stemming from US debt ceiling discussions. The US government's need to sell short-term debt at potentially high yields could sway banks to increase deposit rates and diminish interest in riskier assets like equities.
Treasury Yields, Dollar Index, and Global Currency Fluctuations
Uncertainty surrounding US rates propped up Treasury yields. Two-year Treasury yields rose by seven basis points, standing at 4.589%, and the yield on 10-year notes increased by 3.9 basis points, standing at 3.753%. The US dollar index also rebounded by 0.21% to 103.47, while the euro declined by 0.32% to $1.0748.
Turkish Lira at a Record Low as Bitcoin Dips
In other regions, the Turkish lira sank to a new low despite positive signals from President Erdogan's appointment of a US banker as the central bank chief. In the crypto realm, bitcoin dipped by 0.2% to $26,648 following Binance's announcement of suspending dollar deposits and impending pause of fiat currency withdrawals due to regulatory pressures.
Crude Oil Market Reacts to US-Iran Nuclear Deal Reports
Lastly, crude oil saw modest gains, although reports about a potential nuclear deal between the United States and Iran created fluctuations. Despite denials from both sides, the possibility of an additional supply of 1 million barrels per day from Iran initially impacted crude prices. Brent crude futures dipped before leveling at $76.00 a barrel, while West Texas Intermediate crude steadied at $71.28 a barrel.
