Stocks rebound, gold and silver drive higher
Stock markets are mostly higher this afternoon as they have recovered from the losses that were posted yesterday. In regards to the Russia invasion of Ukraine, the conflict is still ongoing sadly, but there hasn’t been any major developments with respect to Western governments taking aim at Russia. Traders are more focused on the economic war between the West and Moscow, rather than the actual war in Ukraine. Global leaders met today to discuss how to advance their policy against the Russian government, but no serious action was announced, hence why the majority of European stock markets are showing modest gains. Indices in the US are in better shape, as America is less exposed to the war in Eastern Europe.
Judging by the latest US jobless claims report, the labour market is going from strength to strength as the reading dropped by 28,000 to 187,000 – the lowest level since 1969. When you take into consideration the unemployment rate is 3.8%, the lowest since the pandemic began, it paints a picture of a strong economy. With data like that, it is easy to understand why the Federal Reserve hiked rates earlier this month. This week, Jerome Powell and Loretta Mester suggested that rates might be hiked by 50 basis points, and today Charles Evans said he is open to the idea. This could a case of the Fed laying the foundation for a 0.5% hike in the months ahead. The US dollar has given up some of its previous gains, but it is still up on the session, and it has been trending higher over the past week. If the uptrend continues, the US dollar index might retest the 22-month high that was posted at the start of the month.
Gold and silver are showing solid gains this afternoon. The metals took a knock last week as fears about the war in Ukraine began to wane. The precious metals are gaining ground despite the firmer US dollar and the moderate risk-on attitude – stocks are rising. It is possible the declines posted in the commodities last week were overdone, and now we are seeing a rebound.
