The optimism that took hold of markets last week continued until the closing bell on Friday evening as traders seem more and more convinced interest rates have plateaued. The Federal Reserve will hold its final meeting of the year on December 13th; the expectation is that rates will remain unchanged. The reaction currently unfolding in stocks and gold appears to be pricing in no further rate hikes next year either.
The Dow Jones Industrial Average seemed intent to keep its momentum alive on Friday as it smashed through the 36,000 level, gaining 0.82% on the day. The S&P 500 climbed to briefly flirt with the 4,600 mark before settling for a 0.59% gain and the Nasdaq also managed to closed 0.55% in the black. The breath of optimism even spread to the other side of the pond, as the German DAX ended a very strong week by closing 1.12% higher on Friday. The UK’s FTSE index gained 1% on the day and France’s CAC 40 climbed half a percent.
If there was a clear winner last week however the title would have to go to gold. Not content with a mid-week surge to the $2040 area, gold would see a further 1.76% gain on Friday pushing it to a close above $2070. The fun clearly isn’t over yet though, early trading in the Asian session pushed gold firmly to new all-time highs of $2140 an ounce. Gold clearly latching onto the narrative of the Dollar’s reign of terror coming to an end.
The driving force behind gold is clearly also affecting its digital counterpart; Bitcoin blasted past $38k on Friday, continued to climb all weekend before smashing through $40k this morning.
As stated in the last update, oil markets clearly have very little confidence in crude producing countries’ willingness to adhere to the latest OPEC targets, as Brent Crude fell below $80 a barrel on Friday and WTI closed under $75.
A reminder that Nonfarm Payrolls come out this Friday. Recent releases have cultivated the opinion that the US economy is indeed cooling off, a major barometer in the Federal Reserve’s decision-making process. Should new data contradict this, expect a sudden shift in sentiment.
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