The major European indices ended the day with modest gains. Italy’s FTSE MIB led with an increase of 0.98%, while Germany’s DAX rose by 0.19%, France’s CAC by 0.06%, UK’s FTSE 100 by 0.01%, and Spain’s Ibex by 0.23%.<\/p>\n
European 10-year yields showed mixed changes. Germany’s yield rose by 1.6 basis points to 2.701%, France’s by 2.3 to 3.366%, while the UK’s fell by 2.2 basis points to 4.597%. Spain’s yield remained unchanged at 3.289%, and Italy’s rose by 0.6 basis points to 3.543%.<\/p>\n
The US indices saw increases, led by the Russell 2000 and NASDAQ. Dow industrial average rose by 0.06%, S&P 0.21%, NASDAQ 0.41%, and Russell 2000 by 0.84%. Microsoft and Meta are set to release earnings, with estimates for Microsoft at $3.38 EPS and $73.86 billion in revenue, and for Meta at $5.88 EPS and $44.81 billion in revenue.<\/p>\n
US yields increased, with 2-year at 3.899%, 5-year at 3.941%, 10-year at 4.364%, and 30-year possibly at 4.904%. The USD strengthened, with gains against the AUD, NZD, EUR, and GBP. Gold’s price decreased by $30.24, reaching $3297, with its 100-day moving average at $3250.48.<\/p>\n
With the FOMC decision just hours away, the market is clearly bracing for a firm, hawkish message from the Federal Reserve. The rising US bond yields and the strong dollar are the biggest clues, showing traders are positioning for higher rates for longer. This continues the battle against the stubborn inflation we saw throughout 2024, where CPI figures often hovered above 3%.<\/p>\n
We see US stocks are cautiously optimistic, but the real test comes from the tech giants reporting this week. Given that the NASDAQ has risen over 20% in the last year, expectations for Microsoft and Apple are incredibly high. Traders should consider using options to hedge their equity exposure, as any disappointment in guidance could trigger a sharp sell-off.<\/p>\n
Even with modest gains today, underlying market tension is building ahead of these major events. The CBOE Volatility Index, or VIX, is currently trading around 18, which is significantly higher than the calmer periods we experienced back in 2024. Buying call options on the VIX could be a cost-effective way to protect a portfolio against a potential market shock in August.<\/p>\n
In the currency market, the US dollar is the undisputed king. The Euro’s weakness is a continuation of a trend that began when the European Central Bank started cutting rates in mid-2024, well ahead of the Fed. If the FOMC delivers on hawkish expectations, we can expect the EURUSD to break below its key 1.1447 support level.<\/p>\n
Looking at Europe, the Italian market’s outperformance is a notable exception to the continent’s sluggishness. This suggests there are specific domestic factors driving Italian stocks higher, while Germany and the UK barely move. A potential strategy is to trade this divergence by favoring Italian assets over German ones.<\/p>\n
Gold’s sharp drop today is a direct result of rising bond yields, with the US 10-year now yielding over 4.36%. As yields on bonds go up, the appeal of holding non-yielding gold goes down. We will be watching the $3250 level closely, as a break below this 100-day moving average could signal further declines.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" European and U.S. indices rose; yields mixed; dollar strengthened; gold dropped; Microsoft, Meta earnings awaited.<\/p>\n","protected":false},"author":62,"featured_media":16988,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-27703","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/27703","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=27703"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/27703\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16988"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=27703"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=27703"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=27703"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}