A poorly funded optimism [Video]

Ipek Ozkardeskaya Swissquote Bank Ltd

While last week began on optimism that inflation could allow the Fed to cut rates as early as in September, this week begins on pessimism that the latter will probably not be possible. The US markets are closed today, but the US 2-year yield ended last week near 4.95% and the probability of a September cut fell to a coin flip. But regardless, the US stock markets continue to trade near record levels. The S&P500 and Nasdaq both closed last week a few points below their ATH levels, boosted by a fresh shot of energy after Nvidia reported another set of blowout results and a strong forecast – under these conditions, it will be hard for the tech rally to expand to the rest of the market.

In China and nearby, the CSI 300 and HSI index are better bid this Monday morning, the Chinese stimulus measures are supportive of gains, but the rising tensions with the West are threatening the Chinese companies’ revenue expectations.

Here in Europe, investors will also be focused on fresh inflation data for May. If this week’s inflation data shows no surprise, the dovish divergence between the European Central Bank (ECB) and the Federal Reserve (Fed) should prevent the EURUSD from clearing the 1.09 offers.

Author

Ipek Ozkardeskaya

Swissquote Bank Ltd

Ipek Ozkardeskaya began her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high-net-worth clients.

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