A wave of optimism swept through financial markets yesterday. Gold surged to a new record high on Tuesday, gaining 1.9% to close the session at $2,468 an ounce. The Dow Jones Industrial Average was evidently reading from the same script, climbing 1.85% up to 40,954 points, leaving its previous all time high in the dust. The S&P 500 also set a fresh high yesterday, albeit a less explosive one, finishing the session 0.64% in the black. The Nasdaq Comp gained slightly on the day but was unable break new ground. The diverging movements in US indices complement the narrative of a rotation out of the heavy tech majors and back into value-driven stocks that missed out on much of the action in the last six months.
Comments from Jerome Powell on Monday contributed significantly to the upward momentum. The Federal Reserve Chairman acknowledged that inflation is indeed on the right path towards the Fed’s 2% target, adopting a more dovish stance that all but cements a September rate cut in the eyes of many.
One could be forgiven for expecting the Dollar to lose ground in light of the evolving monetary expectations, but the events of last weekend add another dimension to proceedings. The failed assassination attempt of Donald Trump has bolstered his position in the presidential race, increasing his chances of victory in the November election. A second term for the former president is widely seen as bullish for the Dollar, leaving the currency in a volatile middle-ground.
The rising tide also lifted crypto prices over the past few days, with Bitcoin rising back above $65,000 after climbing 6.5% on Monday alone. A second Trump presidency is likewise viewed as bullish for cryptocurrencies, with expectations of friendlier crypto regulations should he be sworn in for another term.
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