Wall St rally sees S&P 500 enters technical bull market – VIX dumps, Gold pumps

A tech led rally saw the S&P 500 index enter a technical bull market after rallying 20% from the October 2022 lows, a big miss on unemployment claims which saw it hit 19-month highs added to the “bad news is good news” narrative, sending yields lower, chances of a Fed rate hike next week tumbling and risk assets soaring.

Big mover in the US stock market was Tesla (TSLA) rallying almost 5% for its 10th consecutive day up day, it’s longest winning streak since Jan 2021.

The VIX or “fear index” continued to sell off today, having now dropped 9 of the last 11 sessions and seeing the cash VIX index hit a 13 handle, its lowest point since the pandemic. Volatility sellers continuing to take advantage of a low volatility environment, though at these levels it’s a risky game in my opinion.

FX Markets

USD was lower on Thursday, with the DXY hitting June lows before troughing at 103.29. A positive risk sentiment and a sharp drop in yields seeing the Dollar Index suffering its biggest one day drop since March. The 103 level looks like the next minor support level, and well withing reach considering recent price action.

CHF was the G10 outperformer seeing strong gains against the USD in the wake of a hawkish set of remarks from SNB Chairman Jordan, USDCHF breaking decisively below its trend line. Jordan noted that inflation is more persistent than the bank had thought, and they are seeing second- and third-round effects. Markets are pricing in a 100% chance of a 25bp hike, and about 50-50 it could be a 50bp hike at the next SNB meeting on June 22^nd.

Commodities

Oil prices plunged early in the US session with USOUSD back below $70 and well below pre-Saudi-cut levels after reports that Iran and US are near an interim deal on nuclear enrichment and oil exports. This was denied around an hour later, seeing a sharp rebound in the oil price in a volatile session.

Gold surged in Thursday’s session bouncing strongly from its 1940-1935 support zone to push above 1970 USD an ounce and erasing all of Wednesdays steep losses. Lower yields and a weaker USD the main drivers of the precious metals price.

Today’s calendar: