Daily Market View-U.S Stock Market

The NASDAQ index fell more than 2% yesterday as steep declines in mega-cap growth stocks led Wall Street below record trading levels, with investors seeking shelter in more defensive parts of the market. Highly valued technology companies including Microsoft Corp, Alphabet Inc., Apple Inc., Amazon.com Inc., and Facebook Inc. fell between 0.6% and 2.4%. All of the 11 major S&P 500 sectors fell in early trading, with technology, communication services, and consumer discretionary falling more than 1.5% each. The defensive consumer staples, utilities, and real estate sectors fell the least. When you're at all-time highs and the market pulls back, the ones that tend to lead to the downside are often the high-beta stocks such as technology. When we have pauses or pullbacks people tend to move out of growth stocks into more defensive names. Investors also waiting for data through the week, including the Labor Department's non-farm payroll data, slated to be released on Friday.

Dow Jones Industrial Average 

The Dow Jones Industrial Average gained 0.06%. The best performers of the session on the Dow Jones Industrial Average were UnitedHealth Group Incorporated, which rose 1.34% or 5.44 points to trade at 411.34 at the close. Meanwhile, Dow Inc. added 2.59% or 1.67 points to end at 66.22 and The Travelers Companies Inc. was up 1.24% or 1.94 points to 158.53 in late trade. The worst performers of the session were Apple Inc., which fell 3.54% or 4.69 points to trade at 127.85 at the close. Salesforce.com Inc. declined 2.94% or 6.58 points to end at 217.18 and Boeing Co was down 0.66% or 1.56 points to 233.63.

NASDAQ 100

The NASDAQ index fell 1.88%. The top performers on the NASDAQ Composite were Cocrystal Pharma Inc. which rose 72.58% to 2.1400, BioLineRx Ltd which was up 52.98% to settle at 4.880, and Neuronetics Inc. which gained 39.21% to close at 14.13. The worst performers were ChemoCentryx Inc. which was down 45.45% to 26.63 in late trade, Sequential Brands Group Inc. which lost 37.66% to settle at 17.0200 and Image Sensing Systems Inc. which was down 23.96% to 8.60 at the close.

Oil

Oil prices rose nearly 1% today, extending overnight gains after industry data estimated U.S crude stockpiles fell much more than expected last week reinforcing bullish views on fuel demand in the world's largest economy. U.S crude futures leaped 60 cents, or 0.9%, to $66.29 a barrel, after climbing to $66.45, its highest since March 8. API figures showed crude stocks fell by 7.7 million barrels in the week ended April 30, according to two market sources. That was more than triple the drawdown expected by analysts polled by Reuters. This should provide some further immediate upside momentum for the market. Traders are awaiting data from the U.S. Energy Information Administration due today to see if official data shows such a large drawdown. If confirmed by the EIA, that would mark the largest weekly fall in the official data since late January. The rise in oil prices to nearly two-month highs has been supported by COVID-19 vaccine rollouts in the United States and Europe.

Precious and Base Metals

Gold prices fell from a more than two-month high on Tuesday, as a rebound in the dollar dented the metal’s safe-haven appeal, while investors speculated that a swifter than expected U.S. economic recovery might prompt an interest rate hike. Spot gold was down 0.4% at $1,786.10 per ounce, after hitting its highest since Feb. 25 at $1,797.75 on Monday. U.S. gold futures fell 0.4% to $1,785.50. A strong dollar is a primary reason for the slight correction. The dollar index rose 0.3%, making gold less attractive for other currency holders. Federal Reserve Chairman Jerome Powell said on Monday the U.S economy is doing better, but it is “not out of the woods yet”. At this stage, it doesn’t really seem particularly market-moving for the Fed to repeat the status quo, the market is now starting to consider when the time for an alternative is going to come. The U.S. central bank wants to keep monetary policy loose for the foreseeable future, but the economic recovery gaining pace has fanned speculations of a pullback in support sooner than expected. Higher interest rates increase the opportunity cost of holding non-yielding bullion. Investors now await April payroll data due later this week for further cues on the U.S. economy’s health. Spot gold may test a resistance at $1,802 per ounce, and a break could lead to a gain to $1,816. Elsewhere, palladium rose 0.1% to $2,973.29 per ounce, after scaling an all-time high of $3,007.73 on Friday. Silver was down 0.3% at $26.79, after hitting its highest since March 1 on Monday, while platinum was steady at $1,230.49.

Traditional Agricultures

Corn rose yesterday to hold near an eight-year high, as weather forecasts showed little sign of rain relief for dry southern Brazil, keeping attention on global supply tensions despite US planting progress. Wheat edged up after dropping more than 2% on Monday as the corn rally underpinned wheat prices, countering pressure from favorable signs for some northern hemisphere wheat harvests, including in Ukraine. Soybeans edged higher as tight oilseed inventories kept the market supported in the face of concern over reduced vegetable oil demand in India due to a surge in coronavirus cases.

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

Market Update: EURJPY Remains Pattern-Bound, Will We See a Continuation?

Today we’re returning to the EURJPY as the price continues to trade in its ascending triangle price pattern.

Looking at the daily we can see clearly that price: remains in an uptrend, and continues to trade in an ascending triangle price pattern.

In trends, these patterns are normally seen as continuation patterns. Price is seen to be charging diagonally before it finally pushes through resistance confirming a new move higher continuing the current trend. Over the last 2 months, EURJPY buyers turned resistance into support not once but twice thanks to the same pattern.

Last week we saw an attempt by buyers to breakout. This move was blocked by sellers and the price failed to hold and fell back inside the pattern. After that sellers made an attempt of their own but this was rejected maintaining the current level of support. Friday last week buyers returned with a strong session. This session maintained the pattern and got this idea back on track.

So far today sellers have been holding sway and the pattern top continues to hold in place. The story remains the same, we’re waiting to see if buyers can break out of the pattern and confirm a new continuation of the current main trend of the EURJPY price.

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

Trading Week Ahead

Last week we saw flat to a mixed week from the majors to the USD. The EUR was an expectation as it rallied strongly mid-week after the ECB rates hold and rates statement. The ECB confirmed that risks remain and things remain clouded in the near term due to the continuing impact of COVID19. At this stage, the ECB advised it wasn’t a time to discuss tapering. Another positive for the EUR was Friday’s PMI data that showed French services increased for the first time since AUG20, and German manufacturing increased. Eurozone services and manufacturing PMI data beat expectations as did UK data, looser pandemic restrictions were seen to help drive the fastest private-sector growth since 2013.

Big News Affected the Markets

The Bank of Canada was another market mover last week when they met. The BOC sent the CAD to 10-month highs after news hit that they cut Q/E purchases to CAD 3 billion a week. The USDCAD was on a bit of a roll before the BOC meeting jumping to 1.2652, after the tapering update price dropped 1.24% from its high ending up back below 1.2500.

Australian retails sales data surprised climbing to 1.4% but this did little to drive the AUD. New Zealand CPI came in as expected at 0.8%. The NZD finished mainly flat to the JPY and had a decent week to the USD.

Stock indexes took a breather last week after several weeks of gains despite Dow was close to a new record. One of the new factors that came into the market was the new tax plan released by president Joe Biden.

President Biden will seek an increase in the tax on capital gains to 39.6% for those Americans earning more than $1 million, this raises taxes on millionaire investors to fund education and other spending priorities as part of an effort to overhaul the U.S. economy. The president is expected to release the proposal formally next week as a way to fund spending in the upcoming American Families Plan. – CNBC

This news looks to have shocked the equity market to a degree. Markets have been sitting very pretty since 2020 on one of the best runs in long while. Investors and traders will now be watching this development closely. If it does have an overly negative impact could this start to form cracks in the bull market?

Oil fell into the red after a decent start to the week. US stockpiles surprised coming in at 0.6M above estimates. OPEC is looking to gradually curb output cuts as demand concerns continue. Gold rallied for the third straight week of buyers retesting 1798.

Bitcoin – The Bigger it Comes, the Harder it Falls

Bitcoin returned to the spotlight last week but not from a record-breaking point of view. Price tumbled trading close to 24% lower at its lows as profit-taking and regulation worries emerged. Over 200 billion was wiped off the cryptocurrency market on Friday alone. Bitcoin traded below $50,000 USD for the first time since March. The market was dramatically overextended. The big question now will be, “Is this just a short-term correction or the start of something bigger?”

Looking Ahead

This week traders will be looking at Biden’s new tax plan and how that could impact equity markets and if momentum shifts how that could influence the USD. Bitcoin’s fall will be a factor this week.

News wise Thursday’s FOMC meeting looks to be the key event of the week. The fund’s rate is expected to remain unchanged but the meat will be in the statement. No changes of surprises in the current bond-buying? The BOJ outlook report and monetary policy are due on Tuesday. Interest remains around the BOJ ETF purchases.

Other points of interest will be OPEC meetings, Australian CPI, and US Advanced GDP which is expected to increase to 6%

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

Daily Market View-U.S Stock Market

The S&P 500 and the Dow edged lower yesterday as a resurgence of COVID-19 cases globally sapped appetite for stocks, while market participants digested earnings from U.S airlines and AT&T, along with mixed readings on economic data. Investor sentiment gradually improved by early afternoon, with seven of the 11 main S&P 500 sectors rising. The S&P 500 healthcare sector hit a fresh record high, while industrials were the biggest gainers. Supporting the mood was data showing the number of Americans filing new claims for unemployment benefits last week dropped to a fresh one-year low. The Labor Department report suggested layoffs were subsiding and expectations were rising for another month of blockbuster job growth in April. Investors are now awaiting quarterly results from technology behemoths next week to provide markets with some direction. Shares of Apple Inc. rose 0.3%, helping the tech-heavy NASDAQ remain afloat.

Dow Jones Industrial Average

The Dow Jones Industrial Average declined 0.94%. The best performer of the session on the Dow Jones Industrial Average was Salesforce.com Inc., which rose 0.39% or 0.89 points to trade at 231.45 at the close. Meanwhile, McDonald’s Corporation added 0.34% or 0.78 points to end at 233.04 and Visa Inc. Class A was up 0.07% or 0.15 points to 227.60 in late trade. The worst performers of the session were Dow Inc., which fell 6.01% or 3.90 points to trade at 60.92 at the close. Walgreens Boots Alliance Inc. declined 2.72% or 1.47 points to end at 52.58 and JPMorgan Chase & Co was down 2.12% or 3.19 points to 147.35.

NASDAQ 100

The NASDAQ index lost 0.94%. The top performers on the NASDAQ Composite were Ocugen, Inc. which rose 42.77% to 9.2800, Codiak BioSciences Inc. which was up 35.41% to settle at 15.87, and Qualtrics International Inc. which gained 22.92% to close at 41.57. The worst performers were Evolus Inc. which was down 18.94% to 9.50 in late trade, Tiptree Inc. which lost 13.01% to settle at 12.37 and Sleep Number Corp which was down 11.92% to 110.04 at the close.

Oil

Oil futures finished with a slight gain yesterday, after falling to their lowest intraday levels in more than a week before reversing course, as traders tried to assess the impact on energy demand of the recent surge in COVID-19 cases in Asia in particular. Despite the pessimism seen this week, the overall oil demand remains robust in two of the largest oil markets, the U.S and China. Data Thursday showing new U.S jobless claims now at pandemic lows strengthens that optimism. Despite the rapidly rising cases in India, economic activity, road traffic, and energy consumption remain well above the levels seen last year. Economic activity and oil demand are not expected to decline to the levels seen last year, even though the COVID-19 cases are far greater. West Texas Intermediate crude for June delivery tacked on 8 cents, or 0.1%, to settle at $61.43 a barrel on the New York Mercantile Exchange after tapping a low at $60.61. For oil prices to build up again, it will take global signs of recovery, and such indications are now scarce in key Asian countries.

Precious and Base Metals

Gold slipped 1% yesterday, retreating from a two-month high, as an uptick in the dollar and U.S Treasury yields hurt the metal's appeal, while palladium lingered near an all-time high. Spot gold was 0.7% lower at $1,780.36 per ounce, after hitting its highest since Feb. 25 at $1,797.67. U.S. gold futures dipped 0.7% to $1,780.90. $1,800 was a bit of psychological resistance, so we've come back with tests. The dollar and the 10-year yields are both a little bit higher and that's pressuring gold as well. The dollar was up 0.1% versus a basket of other major currencies, with the 10- year yield rising as far as 1.587%. Gold has dropped 6% so far this year, mostly pressured by rising yields. The downside in gold is likely to be short-lived amid central bank buying and increasing demand for physical gold from China and India. Switzerland in March recorded its biggest monthly gold exports in ten months as shipments to India jumped. But clouding that outlook was a record COVID-19 surge in the country. Also, dimming bullion's appeal was data showing a drop in claims for unemployment benefits last week, strengthening expectations for another month of job growth in April. Meanwhile, palladium eased off a record high of $2,891.50 per ounce and was last down 1.7% at $2,827.20. Silver slipped 1.6% to $26.14 per ounce and platinum fell 0.7% to $1,205.89. Copper prices in London fell yesterday on subdued demand from physical buyers reluctant to purchase the metal after a 21% rally so far this year, although a softer dollar lent some support. Copper prices have more than doubled since March last year to near a decade high on strong macro and fundamental factors, diminishing appetite from some end-users, especially as an economic recovery in top consumer China slowed.

Traditional Agricultures

Corn, wheat, and soybean futures hit multi-year highs yesterday as concerns about tightening global grain supplies triggered short-covering and fund-driven buying. Wheat futures climbed on unfavorable weather in North America and the prospect of high corn prices boosting demand for wheat in livestock feed. This rally is because corn is in short supply and is likely to remain so in 2021-22.

S o u r c e: News & Quotes (Courtesy: Reuters)

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

Market Update: US30 Has Support But Can it Clear Resistance to Set New Records?

Hi traders, today we’re looking at the US30 daily chart as buyers have set support, but still have resistance to beat to get the trend back on track.

Looking at the current Dow D1 chart, we can see price remains on two trend lines. With the fast to med-term being the main trend at this point. Price has made a two-bar retracement back to the fast trend before yesterday’s fightback reconfirming current support seen at 33,800. This is why we have noted this point as it’s a repeat of the previous price action. You will notice this support came from previous resistance. This pattern was also seen in March. This can also be called a step.

Resistance becoming support is a good sign in a trend. It’s good to see it repeating as it shows price can respect the pattern. That’s not saying this will work on this occasion but it’s a good sign from a buyer point of view.

Dow price today has also started to test the minor downtrend line, but we still see supply and resistance remaining from 34,110 to 34,180. Buyers need to build on yesterday’s move and break this area of resistance to suggest that we may have a continuation in the process. The next step after that will be a test and break of the current all-time high.

If we see resistance hold and price moves back to support caution on the buy-side could be taken as the current retracement has widening bars which can be seen as a small warning unless US30 price breaks higher.

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

Trading Week Ahead

A Mixed Week for Currencies

Last week, we saw some mixed results on the currency front as the USD pulled back as yields fell and profit takers set in. A few factors came into play, one being the IMF upgrading their global growth forecasts. Risk majors were far from unified as the AUD had a mixed week, while the EUR strengthened strongly and the GBP fell. After basically 3-months of gains to the JPY, the USDJPY finally succumb to decent seller pressure. Price was unable to get back to the previous week's highs, and I think that gravity looks to have finally caught up.

Staying on the Yen risk majors had a mixed week with the AUD and GBP falling while the all-conquering EUR moved higher.

The Fed Continues Its Support 

The Fed signaled that the central bank is nowhere near to reducing its support for the US economy. The Fed advised that an uptick in prices will most likely be temporary, and any uptick in COVID cases could slow the recovery. Inflation is also seen to be unlikely at this stage. Some of these points don’t do the USD any favors but are supportive of stocks.

Thursday’s unemployment claims came in higher than expected at 744K this was a touch surprising considering the stronger NFP data seen on the previous Friday.

Stocks Had a Stellar Week

Last week was an excellent week for stock indexes. The Dow and SP500 both hit new all-time highs. Tech stocks looked to have a better week as the Nasdaq outperformed the Dow. The S&P500 was a close second; this index does have a decent tech component, so this was a contributing factor in its gains.

Indexes in Europe moved higher, the FTSE and CAC were the better performers for the week. The DAX and Eurostoxx50 failed to find more momentum after amazing weeks prior.

Oil and Gold Highlights

Oil spent most of the week lower but did see some demand come back into the market on Friday. Crude stockpiles came in at -3.5M during the week, and the outlook remains positive on lower stockpiles and demand as economic growth picks up. One worry remains around the current third wave in Europe and what lockdown actions might do to demand.

Gold continues to remain rangebound, currently price trading between 1700 to the downside and 1758 to the upside. The weaker USD gave buyers some direction last week, but for now, price remains in a medium-term downtrend, and we need some direction to give us an idea of who really has control on the short term.

Looking Ahead

This week we have some significant data coming up, US CPI, which remains a bit of a hot topic and US retail sales data which I would think traders will be watching closely to gauge signs of the current US recovery. Back in Australia, we have unemployment data, and this is the first after the end of Jobkeeper in March. Another to watch out for will be the Chinese GDP which is expected to increase by 18.3%.

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.