US stock prices flatlined on Tuesday as investors remained cautious while assessing whether the recent market rally could be sustained in light of the latest economic data. The S&P 500 added 0.10% to mark a four-day winning streak, the Dow gained 31 points, posting its longest winning streak since December, while the Nasdaq slid 0.10%. The dollar index rose by 0.14% to 105.55 points in afternoon trade, hitting one-week highs as hawkish remarks from a Federal Reserve official strengthened the currency. Trading Economics reported that: “Minneapolis Fed President Neel Kashkari said on Tuesday that he expects that central bank stay put for an extended period until there is clear evidence of disinflation and did not rule out the possibility of a hike if inflation accelerates. Still, markets are pricing in interest rate cuts this year, with the latest softer-than-expected US jobs data and dovish signals from other Fed officials cementing such expectations.”
Tuesday marked the third consecutive day of gains in European stocks, with the STOXX 50 and STOXX 600 both recording gains of more than 1%. Financial services saw the biggest boost, with UBS rising 7.60% after exceeding market estimates and generating handsome profits in the previous quarter. The most recent earnings report from UniCredit, a pan-European commercial bank, also beat forecasts which caused a 3.60% rise in the company's shares.
The Shanghai Composite Index reached its best level in eight months on Tuesday, closing at 3 148, with technology and consumer-related stocks leading the gains. Mainland stocks followed Wall Street's rally as positive US jobs data fuelled expectations that the Federal Reserve would soon begin reducing interest rates. Analysts' optimism on Chinese markets is also growing, as they believe that if macro fundamentals improve, the recent surge may continue to deepen.
Tuesday saw the third straight session of gains for the local bourse, which closed at 76 929, the highest level since August 2023, as expectations that the Fed would soon be able to lower interest rates continued to fuel market sentiment. New York Fed President John Williams and Richmond Fed President Thomas Barkin hinted at a potential interest rate cut this year. Williams, speaking at the Milken Institute Conference, suggested rate cuts might happen but emphasised the importance of monitoring data. Barkin, also optimistic, stated at the Columbia Rotary Club that current rates could tackle inflation, highlighting the Fed's patience amidst a robust job market and the goal to avoid inflation resurgence. At 18h00, the rand was little changed at R18.47/$ and R19.89/€, while it had weakened 0.11% to R23.17/£.
Brent crude prices fell below $83 a barrel on Tuesday, returning to their lowest levels in over two months, following reports that Russian Deputy Prime Minister Alexander Novak suggested OPEC+ could increase crude supply at their next meeting on 1 June. Trading Economics added: “The current supply agreement which removes around 2.2 million barrels per day off the market will expire at the end of June. Meanwhile, industry data showed that US crude inventories increased by 0.509 million barrels last week, defying market expectations for a 1.43 million barrel decline.” Gold lost 0.52% to $2 313.80/oz, while platinum gained 2.20% to $987.3/oz.
