Stock markets seek their way to an equilibrium, as the squall, which has been driving investors from the political turmoil in the White House seems to have passed by.
The mission to unravel the events of Moscow’s meddling in the US elections is now on the former head of the FBI, Robert Muller, who has gotten high hopes both by Republicans and Democrats. Trump himself also appreciated the appointment, thereby bringing significant relief to the US stocks and Greenback. The blue chips erased losses on Thursday, DJIA closed with a gain of 0.27%, the S&P 500 rose by 0.37%, and the index of technology companies NASDAQ gained + 0.01%.
However, the easing of the political tension in the US did not work as an excuse for the Dollar bears to weaken the grip. On a weighted average, the Dollar index pullback faced a powerful resistance at the level of 97.90, which still holds the American currency on track with the decline. The odds of a rate hike in June holds near 80% while the FED members keep investors buoyant, arguing about the relevance of raising rates. Loretta Mester, head of the Federal Reserve Bank in Cleveland, noted that the Central Bank will likely raise rates more often than once a year. This will also help “to avoid overheating of the economy and as a result accumulation of macroeconomic risks,” she added. Despite the Mester’s active involvement in communication between the Federal Reserve and investors, she has no say in making interest rate decisions.
Volatility is gradually declining in the markets but key uncertainties remain unresolved, so investors are likely to retain their positions in defensive assets. The index of “fear” VIX declines for the second day in a row, gold and yen demonstrate sluggish demand after correction, as investors found a compromise between risks and yield. The European and British currencies traded in a moderate plus today. The attention of bulls is again drawn to the Oil market where the barrel is trying to consolidate OPEC’s arrangements by advancing above $50. Investors expect that the countries participating in the agreement will decide to extend the pact for nine months on May 25 gathering. The current agreement which ends in June implies a 1.8 million bpd cut in production.