Wall Street advances, oil tumbles on ceasefire proposal
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President-elect Trump’s proposed nomination of Scott Bessent as Treasury Secretary saw US bond yields tumble overnight. That boosted stocks but prompted heavy US dollar selling. Precious metals and digital assets also slumped, and a proposed Israel-Hezbollah ceasefire caused oil prices to tumble.
On Wall Street, the Nasdaq rose by 0.27%, the S&P 500 gained 0.30%, and the Dow Jones continued Friday’s strong performance, leaping 0.99% higher.
The dollar index fell 0.56% to 106.88, taking out channel support at 107.20. The technical picture remains constructive, with support at 106.10 and 104.95. The US dollar could consolidate this week ahead of the Thanksgiving holiday.
The ten-basis point fall in the US 2- and 10-year bond yields also saved EUR/USD overnight after a weak German IFO. EUR/USD rose 0.75% to 1.0495, testing the top of its one-month down channel. It seems more like a stay of execution than a structural change in sentiment, as the chart remains bearish. But with an oversold RSI and an impending US holiday, the single currency could also consolidate this week.
The rally in risk assets boosted gold by 1.90% overnight to $2,612.00 an ounce, its best performance in a week. The rally has changed the short-term technical picture to bullish, as gold breaks out of resistance between $2,600.00 and $2,610.00. Gold is no longer oversold on the RSI and could initially target the 50-day moving average at $2,6556.00.
A proposed ceasefire over Lebanon saw oil prices slammed overnight on reduced geopolitical tensions. Brent crude fell 3.30% to $72.55 a barrel, and WTI fell 3.0% to $69.00. Both contracts have reversed their recent upside breakouts and turned bearish again. WTI reversed below the triangle and channel support at $70.00. A potential easing of Middle East tension could see support at $66.40 retested. That is a big if.
Those same ceasefire headlines torpedoed risk assets overnight, gold crashing 3.35% lower to $2,625.50 an ounce, a $90.0 an ounce loss. Gold took out channel support at $2,693.50, continuing a period of very messy consolidation since touching all-time highs in October. Initial support is the 100-day moving average (DMA) at $2,566.00, but if a Lebanon ceasefire occurs, more considerable gold losses are possible. That would likely drag silver, cryptos and oil down with it.
Today's calendar in Asia and the US is quiet, leaving the market at the mercy of headline-driven moves. Tomorrow's calendar gets busier with China Industrial Profits, the latest Reserve Bank of New Zealand rate decision, and then US GDP, Durable Goods, and PCE data, a favoured measure of the Fed.
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