On March 31, US stock markets closed on a high note, with the Nasdaq leading the pack. Gold prices experienced a decline, while oil prices soared due to supply concerns. February saw a decrease in inflation, and the consumer confidence index dropped in March.
Today’s Market Overview
US stock indices recorded gains by the close of trading on March 31. The Dow Jones Industrial Average increased by 1.26% to 33,274.15 points, the Nasdaq Composite Index rose by 1.74% to 12,221.91 points, and the S&P 500 Index advanced by 1.44% to 4,109.31 points.
Gold: COMEX June gold futures slid by 0.57% to $1,986.20 per ounce.
Crude Oil: WTI crude oil futures climbed by 1.75% to $75.67 per barrel, while Brent crude oil futures appreciated by 0.63% to $79.77 per barrel.
In February, the US Personal Consumption Expenditures (PCE) inflation index exhibited a 5% YoY increase, falling short of the anticipated 5.1% and the previous 5.4% (revised to 5.3%). This figure represents the lowest level since September 2021. The February PCE inflation index experienced a 0.3% MoM growth, aligning with expectations and falling below the prior 0.6% reading. Discounting volatile food and energy prices, the Fed’s favored inflation metric – core PCE – rose by 4.6% YoY in February, lower than the projected and previous 4.7%, marking the lowest since October 2021. In February, the core PCE inflation index increased by 0.3% MoM, below the predicted 0.4% and the previous 0.6% (revised to 0.5%).
Comments: The ongoing decline in February’s core inflation aligns with expectations. Nonetheless, market anticipations for the Fed’s imminent rate hikes have dropped significantly. Consequently, this has spurred a short-term unleashing of positive sentiment, potentially exceeding standard levels. In the near future, managing expectations and safeguarding against pullback risks is essential.
Consumer Confidence Data
The University of Michigan’s consumer confidence index for March dropped from February’s 67.0 to 62.0, which is lower than the median economist forecast of 63.2, as reported by Reuters.
Comments: The deceleration in consumer spending could intensify market expectations of a short to medium-term economic downturn. The Fed is more likely to raise rates only once more this year.
The S&P 500 Index reached its peak since February 15, following three consecutive weeks of gains. The Nasdaq Composite Index recorded a 16.8% increase in the first quarter, breaking a four-quarter decline streak.
Comments: The ongoing decline in inflation bolsters market sentiment. In the near term, persistent tight labor market data and potential hawkish expectations from the Fed may serve as primary factors influencing market fluctuations.
The most actively traded June gold futures contract on the New York Mercantile Exchange fell by $11.50 on March 31, settling at $1,986.20 per ounce, representing a 0.58% decline.
Comments: Gold prices decreased during the day due to the strengthening US dollar index. Considering the Fed’s potential hawkish expectation management, gold price volatility will likely remain elevated soon.
Crude Oil Market
The most actively traded June Brent crude oil futures contract gained $1.29, or 1.6%, closing at $79.89 per barrel. The May Brent crude oil futures contract rose by $0.50, or 0.6%, settling at $79.77 per barrel.
Comments: The continuous support for oil prices in the short term can be attributed to factors such as the disruption of Iraqi oil pipelines and OPEC’s decision to maintain current crude oil production levels. These factors contribute to expectations of tightened supply. Furthermore, demand-side factors may lead to a short-term increase in expectations. As a result, the probability of oil prices receiving sustained support in the short term is expected to rise.
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