News & Analysis

US Stocks Rally on Economic Data and End of Quarter Flows Ahead of PCE Reading

31 March 2023 By Lachlan Meakin


US stocks rose again in Thursdays session on a mixture of “bad news is good news” and end of quarter flows as fund managers did some window dressing on their portfolios. The bad news was a rise in unemployment claims to 198k for the week, and a US GDP figure that came in below expectation at 2.6%. We also had a couple of Fed speakers that caused some volatility during the session.

The Nasdaq again led the charge higher with Megacap tech stocks outperforming, AAPL, TSLA and MSFT all had healthy gains, the Nasdaq is on track to have it’s best quarter since Q4 21, rallying over 17% in Q1 coming into the last trading session of the quarter.

Another indicator of market optimism was the Vix or “fear” index touching below 20 , The Vix has now retraced most of it’s gains after the collapse of SVB and Credit Suisse.

In FX , the USD was mostly lower with the markets in risk on mode , the EURUSD rallied on a  weaker dollar and a German inflation figure that was hotter than expected, pushing above 1.09 and testing the highs set last week.

After yesterdays steep losses the Yen reversed reversed course, helped along by a fall in US 10 bond yields

Cyclical currencies were bid as well on a weaker USD and risk appetite , Cable touched on 1.24, testing it’s 2023 highs, the AUD and kiwi regained all of yesterdays losses, with the AUD settling above 67 Us cents.

Gold found support at its trendline and rallied above 1950 an ounce, this coincided with a selloff in bank stock at the time showing that gold is still benefitting from it’s safe haven status.

Today in economic news we have the Feds “favourite” measure of inflation, the Core PCE price index, which is expected to show a moderation in monthly inflation doen to 0.4% from the 0.6% in the previous reading. With the next Fed decision on a knife edge, some volatility around this figure should be expected.

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