North American News
Rebound day for the major US indices
- S&P ends 15 hour bar decline with a 5 bar rise to end the day higher
The major US stock indices are ending the day higher. The NASDAQ index led the charge higher after moving down over 20% from its all-time November high close on Friday.
Helping the indice was the Twitter board’s approval of Elon Musk’s $54.20 in cash per share tender offer. If the deal goes through as planned, Twitter would go private.
The final numbers are showing:
- Dow industrial average up 238.06 points or 0.70% at 34049.47
- S&P index up 24.33 points or 0.57% at 4296.13
- NASDAQ index up 165.57 points or 1.29% at 13004.6
- Russell 2000 up 13.53 points or 0.70% at 1954.20
United States Dallas Fed Manufacturing Business Index below forecasts (11.3) in April: Actual (1.1)
Prelim month-end fixing model points to USD buying across the board – Citi
- Dollar flows into month end
“The preliminary estimate of month-end FX hedge rebalancing flows calls for USD buying across the board. The average signal strength in G10 currencies is approximately twice the historical norm,” Citi notes.
“Japanese investors’ needs to reduce foreign fixed income hedges are the main driver of the above-average USDJPY buy-signal. Poor performance of Euro Area bonds on the other hand weakens the overall signal to sell EUR,” Citi adds.
Commodities
Gold Price Forecast: XAUUSD succumbs to a weakening yuan – TDS
Gold Price remains on slippery slopes. Coronavirus-related lockdowns in China are set to continue weighing on the yellow metal, economists at TD Securities report.
Few participants left with appetite to buy gold
“Gold prices are succumbing to a weakening yuan as China’s worsening COVID-19 outbreak saps the buying impulse from yet another pillar of demand for bullion.”
“With little over a week remaining for the Fed to hike by 50bp and to begin quantitative tightening as we expect, demand for bullion from the investor community is likely to ease.”
“Shanghai’s reinvigorated appetite for the yellow metal has helped to support prices, but a weakening yuan should translate into less demand from this cohort.”
Silver Price Analysis: XAG/USD slumps into mid-$23.00s amid broad commodity sell-off
- Silver has slumped towards $23.50 this Monday amid a broader sell-off in risk assets and commodities and as USD strengthens.
- Now XAG/USD is below its 200DMA, bears are eyeing an eventual drop towards Q4 2021 lows in the $21.00s.
Spot silver (XAG/USD) prices came under heavy selling pressure on Monday in tandem with a broader downturn in the market’s appetite for risk and downside in other key commodities such as across energy and metals. Traders cited risk aversion relating to the increased risk of lockdowns in China with a Covid-19 outbreak now reported in Beijing, continued pessimism about the prospects for a peace deal in the Russo-Ukraine war and, perhaps most importantly, recent hawkish chatter from central bank policymakers.
Either way, XAG/USD was last trading down nearly 2.5% on the day just above the $23.50 per troy ounce mark, having broken below key resistance in the form of the 200-Day Moving Average at $23.85 and the March lows at $23.97. That means spot silver prices are trading at their lowest since mid-February, prior to the start of Russia’s invasion of Ukraine, with a modest downturn in global yields on the day as a result of risk aversion likely the only thing stopping silver crashing further towards $23.00.
But the bears will be confident in wake of the recent breakout below the 200DMA, with many calling for a drop towards support in the form of the Q4 2021 lows in the $21.00s in the coming weeks as the US dollar continues to rise on hawkish Fed sentiment and risk-off flows. The key risk events for traders to monitor this week include the first estimate of US Q1 GDP growth on Thursday followed by March Core PCE inflation on Friday, with the latter likely to endorse Fed plans/market expectations for a 50 bps rate hike at next week’s meeting.
WTI crude oil futures settle at $98.54
- Down $3.53 or -3.46%
The price of WTI crude oil futures are settling at $98.54. That’s down $3.53 or -3.46%. The high price reached $101.55. The low extended to $95.28. The move lower was propelled by lockdowns in China and expectations of slower growth.
Looking at the hourly chart, the low for the day stalled near a swing area ahead of the extremes seen in April. That swing area comes between $95.20 to $95.73. The low for the day reached $95.28. The last few hours has seen a snap back rally to the upside with the pair now testing another swing area near $98.72. Move above that level and it should open up the door for further upside probing.
EU News
European traders head for the exits with continued bad vibes about economy/inflation
- Major indices close lower on the day
The European traders are heading for the exits with continued bad vibes as concerns about slower global growth and higher inflation permeate traders psychology (i.e. fear).
Looking at the major indices in Europe, the week has gotten off to a shaky start:
- German DAX, -1.54%
- France’s CAC, -2.01%
- UK’s FTSE 100, -1.88%
- Spain’s Ibex, -0.9%
- Italy’s FTSE MIB, -1.53%
Other News
Morgan Stanley Revises Down Euro Zone 2022 GDP Forecast to 2.7% From 3% Earlier
- Morgan Stanley said on Monday it had revised down its economic growth forecasts for the euro area this year and the next, anticipating a meaningful slowdown in economic growth in the second half of this year.
Reuters are reporting that Morgan Stanley said on Monday it had revised down its economic growth forecasts for the euro area this year and the next, anticipating a meaningful slowdown in economic growth in the second half of this year.
The investment bank said that while the euro area economy had proved resilient, it faced weakness ahead with energy flows from Russia likely to be significantly reduced and headwinds from China where strict measures to contain COVID-19 are weighing on growth there.
In a note published Monday, Morgan Stanley said it had now lowered its 2022 euro area GDP forecast to 2.7% from 3% previously and shaved 1 percentage point off its 2023 growth forecasts to 1.3%.
“Despite the resilience in economic activity shown so far against geopolitical headwinds, we think more material impacts will show in the second half of the year, through various channels of transmission,” the note said.
Cryptocurrency
ECB’s Panetta: We need global effort to bring crypto-assets into the regulatory purview
- Speech from Panetta
“”We need to make coordinated efforts at the global level to bring crypto-assets into the regulatory purview. And we need to ensure that they are subject to standards in line with those applied to the financial system. In doing so, we will have to deal with complex trade-offs, balancing the goals of promoting innovation, preserving financial stability and ensuring consumer protection. We should make faster progress if we want to ensure that crypto-assets do not trigger a lawless frenzy of risk-taking,” Panetta said.
APW to Change Name after Acquiring Crypto Miner CloudXchange
- APW gets an earnings guarantee of US$1.5m for the first 12 months.
- CloudX’s sole owner to get restricted common shares.
The American Premium Water Corporation (APW), a diversified consumer products company, has announced its intention to acquire CloudXchange DataCentre Pte Ltd (CloudX SG), an entity that engages in crypto-mining-related business.
PW in a statement issued on Monday that was obtained by Finance Magnates said its Board of Directors had approved its 100% acquisition of the company which is a wholly-owned subsidiary of CloudXchange DataCentre Inc. (CloudX).
The purchase price of the transaction will be at a consideration of US$45.6 million which reflects a projected price-to-earnings ratio of 30, the products company said.
Additionally, APW disclosed that it will issue restricted common shares of equivalent value to Heng Fai Ambrose Chan, the seller and sole shareholder of CloudX. Chain is an experienced entrepreneur and business owner.
Change of Name
With the acquisition, APW, known for building brands that utilize cutting edge bioscience and nanotechnology in the Cannabidiol and wellness space, will now be focusing on the crypto-mining sector.
In addition, the company intends to change its name to ‘American Premium Mining Corporation’.
APW further explained: “As part of the terms of the acquisition agreement, the Seller [Chan] has provided APW with a guarantee to generate a minimum of US$1.5 million in earnings before interest, taxes, depreciation and amortization (EBITDA) for CloudX SG within the first 12 months from June 2022 or upon the full delivery of the mining rigs (miners).
“In the event that the EBITDA of CloudX SG falls short of US$1.5 million, a guaranteed top-up for any shortfall amount up to US$1.5 million will be borne by the Seller.”
APW’s announcement comes some days after the US Treasury announced that it had imposed sanctions on BitRiver, one of the largest crypto data center service providers in the industry, over its operations in Russia.