With a lack of economic data due out today investors were left mulling over the previous week’s numbers as well as global geopolitical developments over the weekend. A return to form for global equity markets today as benchmark indices on both sides of the Atlantic rallied higher, supported by renewed buying appetite. Investors shrugged off geopolitical tensions in Ukraine and Iraq as a bullish opening for the European session set the tone for the rest of the day as London, Paris and Frankfurt all posted solid gains.
Over on Wall Street, the positive tone from Friday’s session spilled over to Monday as both the S&P 500 and DJIA rose sharply at the open. Comments from vice chairman of the US Fed, Stanley Fischer, assuaged market participants that a rate rise was not imminent as he stated that the recovery in the US as well as global economics had been “disappointing” so far.
The accommodative stance saw gold prices soften for a second consecutive session, as declines extended towards $1,305/oz. Prices had risen to a three week high above $1,320/oz on Friday as violence in Iraq flared before appetite for these higher prices waned. The dollar index posted modest gains throughout the European session but activity remains well within the previous week’s range and we do not expect any significant breakout either side as investors hold out for tomorrow’s release of the Fed Budget for July.