• S&P 500 adds 1.4% weekly, setting new high, at 2,415.8 points
• Strong U.S. GDP data push expectations for June 14th Fed hike
• GBP/USD loses 1.8% weekly, ahead of U.K. general elections
• Oil drops below USD 50, in spite of producers extending output cut

The dissolving of geopolitical woes has paved the way for market gains, amid positive economic developments. In the U.S., the Second estimate for the first quarter’s GDP data was revised upwards, to 1.2%, supporting expectations that the Fed will go ahead and hike rates again, on its upcoming June 14th announcement. The release of the preceding rate decision’s minutes, on Wednesday, has enabled the Fed to lay the guidance that FOMC members are willing to make another move, with most Fed officials saying it will likely be appropriate to tighten ‘soon’.

With uncertainty for the next move of the ECB, still looming, higher expectations of a Fed hike didn’t translate to substantially higher expectations for the longer termed policy. The U.S. 10 year’s yield, namely, remained relatively flat for the week ending a tad lower than 2.25%. With no threat to corporate America’s accommodative financing conditions, U.S equity was free to benefit from the dissolving of risk-off sentiment. The S&P 500 added some 1.4% during the week, setting a new record high of 2,415.8 points. Gains at the Nasdaq were even more vibrant, at a 2.1% weekly increase, setting a new record high of 6,210.2 points.

A strengthening of Jeremy Corbyn’s Labor at the polls took the center stage at the U.K. this week. These, in turn, have led to higher expectations that a Brexit will gain support at the upcoming June 8th general elections. GBP/USD selloff has led to a 1.8% decline for the currency pair Mon-Fri, the largest weekly drop since November of last year. Positively, the weakening of the GBP has aided the FTSE 100 increase some 1% weekly, setting a new record high of 7,547.6 points.

Not a classic risk-on

While the gains in equity may be encouraging, there are indications that it may be too early to celebrate. Oil prices, in particular, have suffered a significant selloff, dipping to a level of USD 48.2 points on Friday, after OPEC & non-OPEC oil producers agreed to prolog the current outputs cuts to March. Evidently, expectations were higher. Friday’s optimism did aid oil rebound to a level of USD 49.9 by the end of the week’s closing bell. On the other hand, that’s still a 0.9% weekly loss.

Further acting against any risk-on fashion, with bond yields not rising gold prices managed to squeeze a 0.9% increase on Friday. Climbing to USD 1,267 per oz. also marked a new four-week-high for the metal.

Bitcoin prices also grabbed ample attention this week. The cryptocurrency ascended close to a USD 2,800 level on Thursday, right before taking a freefall, leading it to trade below USD 2,000 on most exchanges.