Stocks extend rally while NZD gains on RBNZ hawkishness

Summary:

• Global stocks add to recent gains

• Xi Jinping to meet with Robert Lighthizer and Steven Mnuchin on Friday

• NZD rally on RBNZ hawkishness

• USD trades higher against EUR following solid US inflation report

• Oil price surges despite major build signalled by the US Department of Energy

Global stock market indices are extending rally on Wednesday. Significant gains were spotted during the Asian session, especially on the Japanese and Chinese bourses. Similarly upbeat moods were later on spotted on the Old Continent, where vast majority of the blue chips indices is trading higher today. However, some weakness can be spotted in the Eastern Europe. Beginning of the US trading hours was marked by higher opening on Wall Street. Nevertheless, it should be noted that part of earlier gains was already erased and, for example, Nasdaq is trading near the yesterday’s closing price.

Upbeat remarks on ongoing trade talks were the major cause behind today’s rally. Joy increased even further in the second part of the day as reports spurred saying that the Chinese President, Xi Jinping, will meet with the US negotiators on Friday in Beijing. Elsewhere, news surfaced saying that the US President, Donald Trump, is likely to sign the Border Security bill proposed by the lawmakers in order to avoid another government shutdown. Bill does not include as much money to the Wall funding as Trump would want to and according to Bloomberg report Trump will use his executive power to find funding elsewhere.

New Zealand Dollar is the best performing major currency today. Despite not raising rates during today’s meeting, NZD gains on hawkish message delivered over the night by the Reserve Bank of New Zealand. USD is trading somewhat higher against most of the major peers after CPI inflation report for January came in above expectations. On the other hand, EUR and JPY are the worst performing currencies followed by the British pound.

Today’s picture of the commodity market can be named mixed. Oil is trading higher despite major build in inventories signalled by DOE report. Gold is inching higher while other precious metals are moving lower or flat. Industrial metals also trade mixed with copper and aluminum pushing higher and lead, zinc and nickel declining. Most of the agricultural commodities are quote lower on Wednesday, with cocoa being one of just a few exceptions. We encourage you to take a look the Commodity Wrap we have released today.