Market commentary

The dollar index held steady at 104.6 points on Tuesday, keeping in a tight range so far this week as investors awaited the minutes of the Federal Reserve's (Fed) most recent policy meeting for more insight into the course of interest rates. The S&P 500 and Nasdaq Composite both increased by 0.25% and 0.22%, respectively, closing at new highs. The Dow rose 0.17%, recouping some of its losses from the previous session. These moves came as investors weighed a succession of retail earnings reports and the latest remarks from Fed officials. Fed Governor Christopher Waller indicated that policymakers needed to see additional months of positive data releases before discussing interest rate cuts, but later voiced a preference for a "sequence of cuts." Atlanta Fed President Raphael Bostic also stated on Monday that he believes "our new steady state is likely to be higher than what people have known over the last decade, possibly returning to where we were in the 1990s and 2000s." Nonetheless, markets see a 61% likelihood of a Fed rate cut in September and a greater 73% chance in November.

Major European stock markets fell on Tuesday, with the STOXX 50 dropping approximately 0.40% and the STOXX 600 down 0.20%, reversing moderate gains from the previous day, as traders mulled over the monetary policy outlook while waiting for new catalysts.

The Shanghai Composite fell 0.42% to 3 158 points, while the Shenzhen Component fell 0.71% to 9 682 on Tuesday, with mainland stocks retreating slightly from multi-month highs due to a lack of new market-moving catalysts, with the latest measures to support China's property sector failing to improve sentiment. Moreover, traders speculated about the prospect of additional policy loosening after the People’s Bank of China kept its one- and five-year loan prime rates unchanged at 3.45% and 3.95%, respectively, in line with expectations to promote growth while defending its currency.

Tuesday saw the local bourse settle roughly 0.30% lower at 79 808 points due to profit-taking following four consecutive sessions of gains that drove the main index to almost one-and-a-half-year highs. Ahead of the release of the Fed's most recent policy meeting minutes, investors became cautious in their attempt to predict the timing of interest rates this year. Meanwhile, the earnings season continues, and the focus this week will be on local consumer price inflation data for April, set to be published later today. At 18h00, the rand had strengthened 0.54% to R18.06/$, 0.51% to R19.61/€ and 0.14% to R23.05/£.

Oil prices fell on Tuesday, as investors expected lingering US inflation and higher interest rates to dampen consumer and industrial demand. Brent crude futures fell 0.53%, to $83.27 a barrel at 18h00, while US West Texas Intermediate crude (WTI) slipped 0.64% to $79.29 a barrel. Furthermore, Trading Economics reported that the risk premium associated with Middle East tensions has decreased because oil supplies have not been disrupted. All eyes are now focused on the upcoming OPEC+ meeting on 1 June, where key oil producers are expected to extend output curbs to avoid a global oversupply and boost prices.

Gold prices fell on Tuesday as the dollar strengthened, pulling back from a record high set the previous day as a slew of bullish factors, including US rate cut bets and geopolitical uncertainties, fuelled safe-haven demand. Spot gold was down 0.60% at $2 410.73/oz at 18h15 after hitting a record high of $2 440.49 on Monday. US gold futures fell 1% at $2 414.00.