Stocks opened modestly higher while the precious metals trickled into the red this morning as the markets wait for reaction to the FOMC meeting, which concludes today at 2 pm EST. Although there will be no press conference following the meeting, there is still sure to be bits of information leaked that the markets will gobble up. While gold, silver, and platinum each fell slightly into the red this morning, palladium was actually up, again approaching the $800/oz mark. Even when its losses at the end of the year are accounted for, palladium was actually the strongest performing precious metal of 2014, and many analysts are expecting palladium to have another strong showing in 2015.
Yesterday in the Markets
Precious metals rose modestly yesterday while the stock market literally soiled the bed, as the Dow Jones tanked over 300 points. The Nasdaq and S&P 500, along with major European indices such as London’s FTSE 100, Frankfurt’s DAX, and France’s CAC40, each lost about 1.5%. Treasury yields stayed parked around 1.80% for the 10-year note.
Factors Affecting Gold Today
The biggest player in the stock markets today was Apple, which got an enormous boost on its better-than-expected iPhone sales in China this past holiday season. This strength vaunted Apple to the highest net income of any public company in history, increasing profits by 38% to $18 billion last quarter. Apple shares were up over 7% at the opening bell, helping pull the Nasdaq up nearly 1% this morning. Meanwhile, other stocks that suffered at the hands of yesterday’s weak earnings reports are trying to make up ground today.
Greece continues to stir up tensions in Europe now that the Syriza party has taken power. The new coalition has frozen the privatization plans for the country’s largest Port Authority, an unsurprising move given the group’s far-left leanings. The more concerning aspect of the Syriza victory is its international implications, however. The new governing party seems to be siding with Russia in the Ukraine conflict, dissenting from the rest of the EU on the issue. So long as Greece remains in the EU, this hampers the union’s ability to impose new sanctions on Russia, as the member nations must unanimously agree on such matters before action can be taken. Greek bonds and shares continued to fall as the situation develops.
Looking further abroad, China has cut its growth targets for 2015 after posting its lowest annual growth in over two decades. With China slowing down, India is getting closer in the rear-view mirror; some experts are even predicting that India will soon outpace China in economic growth, deepening the rivalry between the two nations. President Obama visited the world’s largest democracy this week, signaling a strengthening of ties between India and the U.S. As the global economy has an ever-greater focus in Southeast Asia, the United States could do well to create stronger ties with India, especially with the pro-American Modi Administration now in power.
There will be no news conference for FOMC meeting today. Weekly jobless claims will be released tomorrow, along with the Pending Home Sales index, the Consumer Comfort index from Bloomberg, and the EIA Natural Gas report.