Markets are
finishing the week on a positive note while S&P 500 boar market index
renewed its all-time highs at 4100 points. Other stock indices are rising too
as Nasdaq gained 2% and industrial Dow Jones – around 0.8%.
But the positive
mood is just limited to stock markets while others are seen reluctant. Brent
crude prices are struggling around $63 per barrel and may plunge any time soon.
The U.S. Dollar is mixed vs G7 currency basket, although it should rather
weaken as stocks are rallying. The yields on U.S. Treasuries are going down and
should support positive sentiment in the market. But, together with rising gold
prices and strengthening Japanese Yen such markets are seen slightly
overwhelmed. Just as if investors are rushing from risky assets to safe haven
instruments, and U.S. stock market is running on inertia.
And, all this is
happening just before corporate reporting season. Next week U.S, banks are
starting the season with promising strong results. What will be the reaction of
the stock market on these reports is very unclear.
So far no new
macroeconomic signals for the stock market rally were seen this week. PMI
reading in G& countries are rising, but it could be an euphoria of purchase
managers driven by vaccination process and stimulus measures globally. If we
look at the macroeconomic data in Japan, households spending in February are
down by 6.6% vs -6.1% a month before. Unemployment level in Eurozone remains
the same at 8.3% despite positive expectations.
FOMC Minutes
published this week showed no new information and there is nothing more left
this week to boost market volatility. March PPI readings in the U.S. are
expected to rise by 3.8% vs 2.8 in February, but this information is already
priced in.
The S&P 500
broad market index may try to make another upside movements to 4110 points, but
this would be its maximum limit this week.
Crude oil perform consolidation as Brent crude prices are squeezed
between the support level at $62.50 per barrel and the resistance at $63.7.
Crude reserves data this week were positive for the prices as EIA recorded a
decline of crude reserves by 3.5 million barrels, well above expected 1.4
million barrels. However, overall market uncertainty and rumors of negotiations
over Iran nuclear deal curb prices.
Gold prices rose above $1750 per ounce breaking through the upper margin
of the wide trading range that was seen recently for quite a long period.
Prices are supported by declining yields on U.S. Treasuries with 10-year bond
yield declining to 1.62%. U.S.-Russia tensions over Ukraine is also waving
support for gold. Nevertheless, gold prices need to consolidate above $1750 per
ounce to climb further.
Currencies
are mixed as the EURUSD is close to its resistance level at 1.19400, where sell
positions would be interesting to open with the target at 1.15300.
The GBPUSD
has already bounced from the resistance level at 1.39200 and returned to the
levels seen at beginning of the week at 1.37400 with a perspective do fall to 1.35100.
The
USDJPY plunged to 109.00 and is likely to continue its slide towards the
support level at 106.50.