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Queen Dovish’s speech sent equities and gold higher

By Margaret Yang

The Fed’s Yellen said the FOMC will move “cautiously” on rate hikes amid rising global risks and has “considerable” scope for stimulus last night. This statement sent US stocks to their highest levels year to date, with the S&P +0.88%, Nasdaq +1.67% and DJ +0.56%. The Dollar Index was down 0.85%. Gold regained its lustre.

10 year treasury yields dropped to 1.81% from 1.88% after Yellen’s speech. The implied probability for an April rate hike dropped to close to 0%, whereas the chance of a June hike is at 28%, down from 38% as compared to a day earlier.

Gold – Cash

Asian equity markets continued to cool down on Tuesday. The Nikkei finished 0.18% lower despite a slightly weaker yen. The Shanghai composite lost 1.28% with shrinking volume. Singapore’s Straits Times Index was down 0.4%, extending its 6th day of consolidation.  Oil dropped for the fourth consecutive day, down 6.4% from the recent high. This may have been expected as rising crude inventories have given traders reason to engage in for profit taking after its 50% rally since mid-February.

Key Technical levels to watch:

  • Strong resistance zone between $1240-1286, which are 50% and 61.8% Fibonacci levels
  • Immediate support level: $1193-$1200
  • 50 Day moving average sloping upward
US SPX 500 – Cash

Key Technical levels to watch:

  • MACD dead crossed
  • Immediate resistance level – 2082, 2132
  • Immediate support level – 2000, 1946
  • 50 day moving average is sloping upward

Margaret Yang Yan, CFA, is a market analyst for CMC Markets Singapore.