Daily Market Commentary 25th March 2024

US equity markets closed out a very strong week of gains boosted by Western Central Banks apparent victory over inflation and citing an appetite for interest rate cuts. The DOW was fast approaching the 40,000 mark, before some profit-taking Friday, interrupted the bonanza. The ‘dovish’ posture of the Central Banks was much anticipated and confirmed by the Federal Reserve Chairman and the Bank of England. The Swiss National Bank actually cut rates, in an apparent victory lap, for the conquest of inflation. This is all fantastic news for Western economies, with lower interest rates, offering stimulus to depressed economies and green-lighting stock markets. European economies are in a state of deep recession, likely to be once again confirmed by UK GDP numbers, to be released this coming week, and are in desperate need of monetary stimulus. This coming week is the beginning of Easter Weekend and a shortened trading week. European and US GDP growth, inflation in Europe and in the US, will be the focus before the long Easter Weekend. The USD rebound has ensured the EUR is now testing the downside of 1.0800, while the GBP trades below 1.2600, ahead of key UK GDP data.

Commodity currencies have been absolutely battered by the rejuvenated reserve, with the AUD falling back to 0.6500, while the NZD has crashed to trade below the psychological ‘BIG Figure’ of 0.6000. NZ GDP growth confirmed the technical recession, but with negative growth in four of the last five Quarters, this is a very, very deep one. The structural economic damage of the previous Governments economic management is coming to light, and this is being reflected in the currency.