Bulls continue to be in charge of US equities

The Dow Jones Industrial Average gained 0.75 per cent on Friday to end at 26,504.95, just 400 points away from its 52-week high of 26,951.81. The S&P 500 index closed 0.96 per cent higher to 2,945.64, after hitting of high of 2,954.13, its highest level in 52 weeks.

“Powell’s lack of hints towards a potential rate cut may have disappointed some investors but, it is our view that his overall sanguine outlook in regards to the domestic economy will be the prevailing — and bullish — catalyst,” said Konstantinos Anthis, Head of Research Research, ADS Securities.

There are many bullish catalysts playing in the market, such as a dovish stance from the Fed amid robust growth and employment data, robust earnings from companies, among other factors. The DJIA has gained 13 per cent on the back of such catalysts while the S&P 500 index has gained 17.50 per cent since January 1.

However, there are a few concerns that investors are worried about.

“The robust US earnings season masked many ongoing concerns. The poor state of global trade, EU economic struggles and the latest round of wobbly global PMI’s, to name a few. But with investors now pondering if China’s fiscal policies and tax cuts are enough to right the ship, it could be a damning foreshadowing of things to come,” Stephen Innes, Managing Partner and Head of Trading at SPI Asset Management said.

Dollar, gold

Dollar may continue to edge higher amid strong outlook for the US economy, triggering dovish stance from the US Fed.

“Greenback traders have been buying the currency during the past 24 hours after the FOMC meeting and Jerome Powell’s remarks indicated that there’s no case for rate cuts by the Fed any time soon. With the head of the US central bank focused on the positive side of the economy and labour market report expected to print strong, the dollar seems poised for more gain,” Anthis said.

The dollar index shed 0.36 per cent lower at 97.48, after gaining 1.36 per cent since January 1.

“Just like the strong Q1 GDP the previous Friday surprisingly sent gold higher the same thing occurred following the monthly US job report which also proved to be on the strong side. Both signs that the selling interest remains muted and for now it points towards continued consolidation with a weaker dollar and/or stocks required to attract renewed safe-haven and diversification demand,” Gold for June delivery on Comex on Friday traded 0.36 per cent higher at $1,280.20 an ounce.