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Gold trades in a narrow range, sentiment remains nervous
This week will be focused on geopolitics and is likely to see some improvement in metals prices but sentiment remains cautious. Gold’s fall from the highs of May 4 was of 7%, while that of silver, always the more volatile metal, was 15% (from May 5 to June 23) to $22.11. This is a combination of a weakening gold price and an uneasy economic outlook in both the eastern and western hemispheres. In common with gold, silver has started a tentative recovery from the lows and is once again above the 200-day moving average.
Gold buying up and US Dollar holdings down at Central Banks
Banks, which comprise a large part of the Official Sector, are building higher gold reserves: “Our 2023 survey revealed that 24% of central banks intend to increase their holding reserves in the next 12 months, according to survey by the World Gold Council (WGC) in May this year. Central banks’ US dollar holdings were forecast to decline, in the same survey: “Half of central banks surveyed believe the percentage of reserves in USD in five years will be between 40-50%, while just over a quarter believe it will remain unchanged.” According to the IMF, the percentage was 60% at the start of the year that, down from 71% at the start of the century.
Bearish Base Metals Bottoming Out?
The macro, micro and technical outlook for base metals has been pretty bearish, and it is not surprising that the base metals price index has fallen to six months lows. Market sentiment towards the outlook for a rebound in economic growth within China weakened this year with the release of disappointing economic data.
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$80 Oil, despite current weakness?
My colleague Fawad Razaqzada recently noted that the Brent oil price has been testing upwards resistance for several days, but concerns over demand have prevented the bulls from committing to the upside. In recent days the bulls have been given supply side reasons to support an upward move, with news that suggests a tighter oil market in the second half of the year. Could oil move back above $80?
VIX risk index rises, Gold unchanged, Nadaq 100 off recent highs
The S&P 500 and Nasdaq 100 were off in morning trade, as debt ceiling talks have yet to produce much progress, despite all the positive rhetoric coming from both sides. The Ukraine war looks to be hotting up, with the risk that commodity prices (and so inflation) will spike. Interestingly, the VIX, Wall Street’s fear index, is creeping up and Gold prices, another risk indicator, were unchanged after recent selling.
Gold, Silver prices dip as debt talks make progress
Debt ceiling talks were the key motivation for gold and silver price slipping this week. After an intraday high of $2,048 per ounce on 10 May, gold fell below the $1,980-$2,000 support level to stand at [$1,960] at the time of writing. The technical position is weakening for gold and silver. Professional and physical market players are not currently prepared to take directional views. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Indices flat on quiet news day, Regional Banks bounce back
Today's focus on the debt ceiling talks combined with poor earnings to weigh on stocks this morning, with Regional Banks struggling to recover from an early sell-off. Inflation and deficit talks weigh heavy on market sentiment, with both being risks to a major sell-off (if a low probability.)
Indices flat on quiet news day, Regional Banks bounce back
Wall Street was flat calm today after last weeks’ Fed and Payroll news. US Consumer Price Indices (CPI) and Producer Price Indices (PPI), due on Wednesday and Thursday respectively, will give read outs on inflation in April. This is perhaps the major source of market risk this week, and in that light US Consumer’s inflation expectations published today are more interesting than usual.
Indices rally on stronger jobs report, but data negative for rate cuts
Wall Street rallied on this morning’s strong jobs data, as traders digest this week’s comments from the Federal Reserve, and the continuing saga of worrisome news from the regional banking sector. Today is a risk-on day for indices even as the promise of interest rate cuts is diminished.
Fed statement after rate hike suggests a pause in rate rises will be data-driven
The Fed delivered a much anticipated quarter point rate rise yesterday but not the hoped for and reassuring words on a “pause” in further rate hikes, or better still rate cuts in the second half of the year. Major indices fell into the red and the VIX, Wall Street’s fear index, pushed back into the 20's (21.3 intraday) for the first time since late March. The gold price hit an all-tine high of $2,070. Inflation remains the major risk factor. Tomorrow’s US Payroll numbers will be scrutinized for signs of weakness in what continues to be an otherwise strong labor market.
Indices start to reprice risk ahead of the Fed’s rate announcement
Indices were choppy at mid-day, with Tech and Small caps ahead and Regional Banks off again. New highs for the gold price, the VIX, Wall Street’s fear index, trekking back up from recent lows, and lower bond yields, all point to a gradual repricing or risk in financial markets. Economic data was surprisingly strong, notably inflation components.
Indices fell, Gold and Bonds rally, VIX fear index up
Stocks fell and bonds rallied this morning on increased recession fears following this morning's weak US labor market data, with the poorest job openings data since April 2021. The VIX, Wall Street's fear index, surged higher to trade near 20, and Gold hit a 3-year high. While the Fed is widely expected to hike rates tomorrow, Fed fund futures are now pricing in expectations of three possible rate cuts by the Federal Reserve's December meeting, even though it has clearly stated in the past that it won't start cutting rates until next year at the earliest. An outside risk, tangible if hard to price, is continuing geopolitical tensions involving global superpowers.
Indices in Positive Territory, VIX hits new low, despite Bank Failure
It’s Fed Week on Wall Street and will occupy the primary focus of traders until at least Wednesday afternoon, when traders are finally able to hear more about the longer-term intentions of the central bank. Markets shrugged off JP Morgan’s acquisition of First Republic Bank, the biggest bank failure since 2008. This morning's economic data came in as good as, or better than, expected. The VIX, Wall Street’s fear index, continues to decline and indicate a pretty sanguine outlook.
Indices bounce back amidst signs that inflation is sticky
Leading indices bounced back by mid-afternoon, ahead of next week’s Federal Reserve meeting. The VIX, Wall Street’s fear index, fell to the 16 mark, the lowest level seen for almost 2 years and suggesting that traders have few concerns. We would invite readers to take a look at our recent research on equity market valuations, ‘Are equity markets too relaxed?’
Indices ahead on good earnings, belief that rate peak is in sight
Upbeat earnings reports and a belief that an interest rate peak is near lifted Wall Street this morning, despite disappointing data on the economy and housing market data. The Federal Reserve is still expected to raise its benchmark interest rate by 25 basis points next week, but then to starting to cut rates by up to 50 basis points by the end of the year. We would invite readers to take a look at our recent research on potentially worrying equity market valuations, ‘Are equity markets too relaxed?’
Indices ahead on good Tech earnings, shrug off Banking woes
Indices shrugged off bad news from the banking sector (government is unwilling to intervene in the rescue of First Republic Bank, news reports suggest) and focused on good the tech sector (a favorable earnings report from Microsoft this morning), but in the next few weeks it’s still all eyes on economic data ahead of next week’s Federal Reserve meeting. Today’s reports showed that core durable goods orders fell and retail stocks rose in March, hinting at a weaker economy.
Indices dip on recession fears, Gold rallies
US Indices opened weak and remained under pressure by mid-day. First Republic Bank's depositor flight reminded the market of banking sector nerves. Consumer confidence readings were worse than expected and data suggests the manufacturing sector is under pressure. Corporate earnings have been mixed, and Tech sector giants Alphabet and Microsoft due to report after the close today.
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Indices mark time waiting for the Fed
Indices are unchanged ahead of this week's critical earnings and economic reports. Traders remain cautious ahead of tech earnings reports and a set of critical economic data scheduled for release ahead of next week’s highly-anticipated meeting of the Federal Reserve. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Are Equity Markets Too Relaxed?
In this, our first Friday Briefing, we provide some context on market valuations and highlight risk at this late, late stage in the Bull market. Stocks have been rising for over 13 years, if we date the last major Bear market low in March 2009. Opinions vary, but typical bull markets are between 7 and 9 years. It’s worth thinking about why this rally was so prolonged, and what might bring it to an end. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Indices continue to mark time, risk levels low
Equity indices were flat, but surprisingly the VIX ‘fear index’ fell below 17 to trade at its lowest level in 15 months. A quarter point rate rise in May is baked into market expectations (which might be optimistic). Earnings disappointed today: Goldman Sachs earnings fell short, Johnson and Johnson cautioned investors. Today’s Chinese GDP numbers raised optimism for its economy, with positive implications for the global economy. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Indices continue to mark time, risk levels low
Equity indices were flat, but surprisingly the VIX ‘fear index’ fell below 17 to trade at its lowest level in 15 months. A quarter point rate rise in May is baked into market expectations (which might be optimistic). Earnings disappointed today: Goldman Sachs earnings fell short, Johnson and Johnson cautioned investors. Today’s Chinese GDP numbers raised optimism for its economy, with positive implications for the global economy. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Indices flat, Gold shines as we wait for a rate rise in May
Equity indices were flat, but surprisingly the VIX ‘fear index’ fell below 17 to trade at its lowest level in 15 months. A quarter point rate rise in May is baked into market expectations (which might be optimistic). Earnings disappointed today: Goldman Sachs earnings fell short, Johnson and Johnson cautioned investors. Today’s Chinese GDP numbers raised optimism for its economy, with positive implications for the global economy. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.
Base Metals Bounce on Supply Issues
Natalie Scott-Gray discusses the importance of Peru’s reopening of key mining corridor after a period of significant political volatility: the countries mines are responsible for 12% of global copper output, or 2.8 million tons in 2023; in addition, Peru produces significant lead, zinc, tin, and silver.