Markets Week Ahead: Dow Jones, S&P 500, Bonds, Gold, NZD, RBNZ, Bank Earnings

U.S. dollar banknote with map

The first full trading week of April saw market sentiment extend what has been the dominant exuberance since last year’s Covid-induced low in financial markets. On Wall Street, the Dow Jones and S&P 500 added onto gains, pushing deeper into record highs. This time around however tech stocks outperformed their value-oriented counterparts as the Nasdaq Composite soared.

European equities were also in the spotlight, particularly as the UK’s FTSE 100 outperformed most of its regional, North American and Asia-Pacific counterparts. Stock investors found some relief in falling longer-term Treasury yields, both in the United States and externally. Still-dovish commentary from the Federal Reserve cooled 2022 rate hike bets.

As a result, it was not a pretty week for the US Dollar as it underperformed most of its G10 peers. The currencies that capitalized on falling yields in the US were the EuroJapanese Yen and Swiss Franc. Anti-fiat gold prices nudged slightly higher. Crude oil prices weakened as rising Covid cases in India, lockdowns in parts of Canada and Europe dented the outlook for demand.

The first-quarter earnings season is starting to roll in, with a busy week ahead for banks in the US such as JP Morgan, Citigroup and Bank of America on tap. Financial stocks have generally been underperforming, but their pace has been picking up lately amid higher bond yields. Local CPI and retail sales data will also be on the docket. The former will be key to watch for bonds.

Fed Chair Jerome Powell will also have a moderated Q&A session at the Economic Club of Washington on Wednesday. He could reiterate recent dovish language, perhaps bolstering gold prices. The Euro is eyeing ECB Chief Christine Lagarde, who will also be at a Reuters event on the same day. The New Zealand Dollar will be awaiting the RBNZ rate decision. China reports first-quarter GDP. What else is in store for markets ahead?

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