Starting the Week on the Right Foot as Risk Sentiment Improves After Weekend
Last Friday we closed the week on the back foot, as the conflict in the Middle East escalated and risk sentiment deteriorated fast. But, today the situation seems better, with stock markets turning positive mostly. Nasdaq is leading the way with a 1.5% rally on strength from Meta (+3.4%) as it tries to roll out ad-free subscriptions.
Amazon is also continuing its rebound from Friday with a 3.4% rally and Microsoft is up 2.7% as the Magnificent 7 re-assert themselves. Although we should be careful with this rally as oversold bounces can be strong but they can also fade quickly. A sustained bounce will need some help from the FED or at least the bond market.
The Nasdaq collapse that began late last week is easing as the market gains some clarity on the Middle East. Israel launched its ground attack late Friday, but it did not create a second front, at least not yet. It also indicates that the US is not supporting a bigger conflict that may spread to Iran.
Of course, everything can change quickly as we have seen all this month, and some of the remarks from Turkey are concerning, but for the time being, the market is breathing a sigh of relief. Month-end flows and dip buying on weaker European inflation are expected to be mixed in. The US treasury yields have resumed the climb in the last few hours, and they’re starting to pull the USD higher with it.
EUR/USD Live Chart
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