US Stock Market Bounces

After the sharp falls on Thursday, US stock markets had a significant bounce on Friday with the Dow Jones climbing 1.4% and the S&P 500 1.5%. Although the close was positive, the trading session was exceptionally volatile with the Dow recovering 800 points from the lows just after lunch to eventually produce the positive close. US bond yields returned back to their recent highs such that the ten-year bond is now trading at 2.85% while the 30-year bond is yielding 3.16%. The next significant level for the ten year is now 3.0% and market participants will be closely watching this level to see the effect any break of it might have on equity markets. The spread between the US and Australian 10-year bonds is now less than 2 basis points.  

This week the US will release its CPI data which will be a critical piece of information for judging whether inflation is returning to the US. The expectation of higher inflation is part of the driving force for the increase in bond yields which is what is believed to have sparked the sell-off in stocks last week.  

Gold continues to gradually slide from its highs in late January despite the increased market volatility. Both higher volatility and inflation expectations would normally be bullish for gold although at this stage this hasn’t played out. The prospect for higher rates may still be holding back any appreciation in the gold price. Due to the falls in the Australian dollar relative to the US dollar, the AUD price of gold has been relatively strong recently and has been flirting with the AU$1,700 level recently.

ASX 200 futures are down 28 points this morning, despite the positive close in the US.  

Data Releases:

-    No Significant Data

To view the Rivkin economic calendar and Local Markets matrix, members can click here.

This article was written by William O'Loughlin - Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via or by phoning +612 8302 3633.

Complex product warning

This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

This article contains information about CFDs, which are considered complex financial products. Please click here to read ASIC's "Thinking of trading contracts for difference?" document before considering an investment in CFDs.
comments powered by Disqus

DISCLAIMER: Rivkin aims to provide clear and simple information to those visiting our website. If any part of this disclaimer does not make sense, please phone Rivkin and ask to speak with a member of our Dealing and Relationship Management Team. Rivkin provides general advice and dealing services on securities, derivatives and superannuation (SMSF). Rivkin also provide SMSF administration and accounting services. Rivkin does not provide advice that takes into account your, or anybody else's, investment objectives, financial situation or needs. We strongly suggest that you consult an independent, licenced financial advisor before acting upon any information contained on this website. Investing in and trading securities (such as shares listed on the ASX) and/or derivatives (such as Contracts for Difference or 'CFDs') carry financial risks. CFDs carry with them various additional risks that differ from more simple securities such as fully-paid company shares. Some of these risks include not owning the underlying instrument from which a price is being derived, settling trades 'over the counter' with a financial institution rather than on a stock exchange, and using leverage to gain access to trades that may have a higher face value than your initial deposit. This risk of leverage means that it is possible to lose more than your initial investment. Our aim is to create more life choices for our clients, which means improving the wealth of clients throughout many market cycles by nurturing a relationship spanning many years. If you are not comfortable with your understanding of the risks involved before using a Rivkin product and service, please contact our office to seek further information or a Product Disclosure Statement, or make an appointment to sit with one of our friendly financial experts. It is in our interest for your Rivkin experience to be a rewarding and comfortable one. Rivkin is a trading name of Rivkin Securities ABN 87123290602, which holds Australian Financial Services Licence No. 332 802.