Economic Indicators & Central Banks:
- Stocks and currencies sell off, while the US Dollar picks up haven flows.
- Treasuries yields spiked again to fresh 2024 peaks before paring losses into the close, post, the stronger than expected retail sales eliciting a broad sell off in the markets.
- Rates surged as the data pushed rate cut bets further into the future with July now less than a 50-50 chance.
- Wall Street finished with steep declines led by tech. Stocks opened in the green on a relief trade after Israel repulsed the well advertised attack from Iran on Sunday. But equities turned sharply lower and extended last week’s declines amid the rise in yields.
- Investor concerns were intensified as Israel threatened retaliation.
- There’s growing anxiety over earnings even after a big beat from Goldman Sachs.
- UK labor market data was mixed, as the ILO unemployment rate unexpectedly lifted, while wage growth came in higher than anticipated – The data suggests that the labor market is catching up with the recession. Mixed messages then for the BoE.
- China grew by 5.3% in Q1 however the numbers are causing a lot of doubts over sustainability of this growth. The bounce came in the first 2 months of the year. In March, growth in retail sales slumped and industrial output decelerated below forecasts, suggesting challenges on the horizon.
- Today: Germany ZEW, US housing starts & industrial production, Fed Vice Chair Philip Jefferson speech, BOE Bailey speech & IMF outlook.
- Earnings releases: Morgan Stanley and Bank of America.
Financial Markets Performance:
- The US Dollar rallied to 106.19 after testing 106.25, gaining against JPY and rising to 154.23, despite intervention risk. Yen traders started to see the 160 mark as the next Resistance level.
- Gold surged 1.76% to $2386 per ounce amid geopolitical risks and Chinese buying, even as the USD firmed and yields climbed.
- USOIL is flat at $85 per barrel.
Market Trends:
- Breaks of key technical levels exacerbated the sell off. Tech was the big loser with the NASDAQ plunging -1.79% to 15,885 while the S&P500 dropped -1.20% to 5061, with the Dow sliding -0.65% to 37,735. The S&P had the biggest 2-day sell off since March 2023.
- Nikkei and ASX lost -1.9% and -1.8% respectively, and the Hang Seng is down -2.1%.
- European bourses are down more than -1% and US futures are also in the red.
- CTA selling tsunami: “Just a few points lower CTAs will for the first time this year start selling in size, to add insult to injury, we are breaking major trend-lines in equities and the gamma stabilizer is totally gone.” Short term CTA threshold levels are kicking in big time according to GS. Medium term is 4873 (most important) while the long term level is at 4605.
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Andria Pichidi
Market Analyst
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