Summary:
- US cash session begins with markets above Friday’s close
- US100 leading the charge and posts a new all-time high
- US clocks go forward 1 hour for Daylight savings time
It’s been a positive start to the week for stock market bulls with most major indices rising so far today. This bright mood seems to be a continuation of Friday’s rally which saw US markets surge higher following the most recent jobs report, which showed a strong number of roles had been added and that wage growth had risen more slowly than expected.
After a strong day of gains on Friday, the US100 has continued higher to post new all-time highs. Source: xStation
This was seen as a sweet spot as far as equities are concerned with the labour market clearly strengthening but the absence of a large pick-up in wages suggesting that fears surrounding inflation running ahead of steam may have been a little premature.
The US100 has recovered the best out of all three major US indices from the dramatic drop at the start of February and in closing at a fresh all-time high on Friday this recovery is now complete. There have been further gains so far this morning and a fresh intra-day peak has been made at 7155.
The rally seen at the tail-end of last week saw the market negate a possible double top around 7051 and head further North into uncharted territory. Source: xStation
The week ahead contains CPI and retail sales data from the US, but it appears quite unlikely that either of these on their own has the potential to derail the latest move higher. Politics, on the other hand, could well disrupt the relative serenity, in particular any unexpected developments regarding a trade war.
A recent note from Goldman Sachs is perhaps surprising in that it appears that stocks exposed to a potential tariff retaliation to the Steel and Aluminium levies are not showing any underperformance.
The chart below shows market prices for companies that have a high imported cost of goods sold (IE susceptible to suffering under retaliatory tariffs) and it appears that there is little by the way of weakness amongst them. Source: Goldman Sachs