Global stocks rallied overnight on stronger economic data, good company reports and bullish testimony from the Fed chairman. The US dollar strengthened, and the British Pound had a poor night as Britain works its way through the Brexit process. A new trade agreement between the European Union and Japan that largely eliminates tariffs kept trade fears at bay. Commodity markets issued conflicting signals.
US Federal Reserve Governor Powell expressed confidence in both the domestic and international economies in remarks to Congress widely interpreted as hawkish. The re-iteration of an ongoing hiking stance helped the US dollar break to 6 month highs against the Japanese Yen. Sterling shed 1.5 US cents as Prime Minister May cancelled planned holidays to continue internal negotiations.
Italian inflation, UK wages and US industrial production data helped lift investor sentiment. 11 out of 11 S&P 500 companies reported earnings above forecast levels overnight. Goldman Sachs and Comerica led the positive surprise, and could see support for financial stocks in trading today. Omnicom also delivered better results, and the Nasdaq index hit another all-time high. A further 61 top 500 companies report tonight.
Commodity markets are a potential source of worry, and support, for investors. Oil and copper slid further in overnight trading, suggesting a deteriorating industrial outlook. On the other hand gold slipped below important support to trade down to US $1,226 an ounce, pointing to higher investor confidence.