A strong US Services PMI beat started another positive week as stocks drifted up, helped by dovish FOMC minutes. It was moderate but solid risk-on, with NDX outperforming and DXY declining smoothly all week, helping Gold. SPX and DJI, unlike RUT and NDX posted new all-time highs, as did DAX and the MCSI World Index. Yields ranged finishing down but in last week’s range, as did Oil.
Next week is the start of earnings season, with JPM, C and GS leading the way as always. In practice surprises are unlikely, but with markets at elevated levels, the risks are to the downside. Before earnings comes US inflation on Tuesday. The estimate is up on the last month, and a beat could cause taper concerns.
Friday’s rally continued with even further vigor today helped by the ISM Services PMI beat. SPX was up 1.44% and NDX even further. Europe was closed but DAX futures hit an all-time high The safe haven dollar was down. Yields were slightly down, and surprisingly so was Oil. Gold was flat on the day.
Tuesday April 6
US market were slightly off today, rotating into Europe to post an ATH for SX5E, the first since the pre-pandemic high over a year ago. Of the major indices, only FTSE is still below the Feb 2020 level. The dollar fell again, pushing Gold up. Bonds were also up, and Oil recovered somewhat.
Wednesday April 7
A flat day throughout asset class land, with equities, gold, oil and the dollar, although both all showed a slight blip upwards after the dovish FOMC minutes. FTSE advanced on a weaker dollar, but both DAX and SX5E retreated.
Thursday April 8
The Fed message had more effect today, with another rally across the board. DAX and now the MCSI World Index posted all-time highs. The dollar duly fell pushing Gold up again, and yields down. Oil was flat on the day.
Friday April 9
In a move similar to the previous Friday, markets rallied hard into the close, with for once, DJIA outperforming NDX, after four days of tech outperformance, and posting a new ATH, as did the MSCI World. The dollar reversed up after declining all week. Gold, bonds and Oil were all down.
WEEKLY PRICE MOVEMENT
A week of rotation back into NDX made it the top index, up 3.87%. The top forex pair was EURGBP up 1.95%. Cryptos were fairly flat (by their standards, ie under 5%), and FANG again outperformed NDX as a whole.
My strategy of the most extreme pair last week worked, but hardly at all, up 0.03%, taking the total to -1.03% 9/13 wins. I will try it again and sell EURGBP hoping for a reversion to mean.
Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.
NEXT WEEK (all times are GMT)
(Calendar High volatility items are in bold)
- Q1 Earnings season opens
- US inflation expected to rise
- Early Chinese GDP
- US Retail Sales, German inflation
Monday April 12
As is often the case, a quiet Monday with no US releases.
09:00 Eurozone Retail Sales (YoY e-5.7% p-6.4%)
14:30 BoC Business Outlook Survey
17:00 Fed Rosengren speech
18:00 US Monthly Budget Statement(Mar)
Tuesday April 13
The US inflation reports dominates today, too high and it might worry traders that the Fed may tighten policy.
02:00 China Imports/Exports/TB
06:00 UK Mfr/Ind Production
06:00 UK GDP
08:00 UK NIESR GDP Estimate (time approx.)
09:00 Eurozone ZEW Economic Sentiment
09:00 Germany ZEW Economic Sentiment
10:30 DE10Y Bond Auction (time approx.)
12:30 US CPI (YoY e1.6% p1.3%)
Wednesday April 14
Earnings season opens today, as usual with JPM first out of the gate. WFC and GS also report today. Markets are closed in India.
00:30 Aus Westpac Consumer Confidence(Apr)
01:00 RBNZ Rate Decision/Statement (e0.25% hold)
09:00 Eurozone Industrial Production s.a. (MoM)(Feb)
18:00 Fed Beige Book
18:30 Fed Williams speech
Thursday April 15
The second day of earnings season has BAC, C and top Dow component UNH (7.32%). Today would normally be US Tax Day, but this year the filing deadline has been extended to May 17. There are rate decisions in S.Korea and Turkey.
01:00 Aus Consumer Inflation Expectations(Apr)
01:30 Aus NFP/UnEmp (NFP e35k p88.7k)
06:00 Germany CPI (e2% p2%)
12:30 US Retail Sales (Control Group e-0.9% p-3.5%)
12:30 Philly Fed Mfr Survey(Apr)
12:30 US Jobless Claims(Apr 9)
Friday April 16
There are Eurogroup and EcoFin meetings all day today.
02:00 China Q1 GDP (YoY e18.6% p6.5%)
02:00 China Retail Sales/Industrial Production
09:00 Eurozone CPI
12:30 US Building Permits/Housing Starts
14:00 Michigan CSI (e88.9 p84.9)
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