North American News
US major indices mixed with Dow higher, S&P and Nasdaq lower
- Major indices off to a mixed start to begin the trading wee
The US major indices are closing mixed with the Dow up modestly and the S&P and Nasdaq lower.
A look at the final numbers shows:
- Dow industrial average rose 26.76 points or 0.08% at 32223.41
- S&P index fell -15.87 points or -0.39% at 4008.03
- NASDAQ index fell -142.2 points or -1.20% at 11662.80
- Russell 2000 fell -9.24 points or -0.52% at 1783.42
Recall, the broader S&P and NASDAQ index have been down 6 straight trading weeks. The Dow industrial average has fallen 47 straight trading weeks him.
Some oversize winners today included :
- Occidental, +5.88%
- Schlumberger, +3.53%
- Chevron, +3.09%
- Exxon Mobil +2.38%
- Merck +2.13%
- Caterpillar +1.39%
- Dollar Tree +1.29%
- IBM +1.21%
- Northrop Grumman +1.16%
- Pfizer +1.14%
Big losers today included:
- beyond meat -12.8%
- DoorDash, -10.72%
- Shopify, -10.56%
- Snowflake, -8.8%
- GoodRx -8.2%
- Rivian, -6.89%
- crowdStrike, -6.33%
- Zoom, -6.24%
- Tesla -5.88%
Commodities
Gold Price Forecast: XAU/USD reclaims $1800 but remains below the 200-DMA as bulls regain Composure
- Gold bull’s lifted the yellow-metal shy of the YTD low at around $1780.
- A wobble sentiment boosts gold prices in tandem with the greenback.
- Gold Price Forecast (XAU/USD): Will remain bearish, below a two-year-old upslope trendline, unless bulls reclaim the previously-mentioned.
Gold spot (XAU/USD) recovers some ground after slipìng below the $1800 mark on Friday, on higher US Treasury yields, which during the session are sliding, thus lifting the prospects of the non-yielding metal. XAU/USD is trading almost flat, around $1811.02 a troy ounce at the time of writing.
Sentiment-wise, the rhetoric of the last couple of weeks remains, with European and US equity bourses split between gainers and losers. The Federal Reserve’s aggressive tightening expectations, China’s Covid-19 lockdowns, and high inflationary pressures spurred by the ongoing war in Ukraine remain on investors’ radar.
Meanwhile, the yellow metal has benefited from lower US Treasury yields, with the 10-year benchmark note down five basis points, sitting at 2.88%, a headwind for the greenback. The US Dollar Index, a measurement of the buck’s value, is gaining 1.26%, sitting at 104.517, but without weighing on gold.
In the mid-North American session, money market futures have priced in a 100% chance of a 50-bps increase by the Fed in the June meeting. Earlier in the day, the New York Fed President John Williams said that the number one issue is inflation, and it is running far too high and stubbornly persistent. Williams stated that 50-bps rate hikes make sense at upcoming meetings and added to the rhetoric of central bank policymakers that China’s struggling with the coronavirus and Ukraine’s war are the significant drivers of market volatility.
Elsewhere, China continues struggling with Covid-19 as its Industrial Production shrank by 2.9, lower than the 0.4 growth expected, its lowest reading since March 2020. Despite the previously-mentioned, a ray of hope shows in the window, as Shanghais is about to gradually begin reopening businesess, including shopping malls and the manufacturing hub. Contrarily Beijing will extend work from home guidance in several districts.
In the week ahead, the US docket would feature Fed Chief Jerome Powell, St. Louis President James Bullard, and Chicago’s Fed President Charles Evans. Data-wise, April’s Retail Sales, Industrial Production, Building Permits, and Initial Jobless Claims would shed some light regarding the actual economic status of the United States.
Gold Price Forecast (XAU/USD): Technical outlook
Interestingly, the Gold Price jumped near the YTD low at around $1786 and is forming a “gravestone doji,” which is perceived as a signal of “indecision.” Also, it’s worth noting that an almost-two-year-old upslope trendline, previous support, has been broken. Unless gold bulls reclaim the aforementioned, XAU/USD is vulnerable to further downward pressure.
If XAU/USD’s bulls reclaim the upslope trendline, they will find resistance levels around the 200-DMA at $1837, followed by May 3 cycle low at $1850, and then the $1890 barrier.
On the flip side, XAU/USD’s first support would be $1800. Break below would expose May 16 daily low at $1786, followed by the YTD low at $1780 and then December’s 15 cycle low at $1752.35.
Silver Price Forecast: XAG/USD rallies above $21.50 on falling US Treasury yields
- The white metal is rallying more than 2% in the day amidst falling US Treasury yields.
- Sentiment has improved in the session, a headwind for the greenback.
- Silver Price Forecast (XAG/USD): Bears take a breather and gather around $22.00, expecting to defend that resistance level.
Silver spot (XAG/USD) held its ground for the last two trading days and advances firmly in the North American session, almost 2% up, and is closing at around the $21.50 mark, boosted by falling US Treasury yields. At the time of writing, XAG/USD is surging sharply and is trading at $21.53.
Silver is soaring as US Treasury yields fall; Fed Chair Powell to speak on Tuesday
Meanwhile, US Treasury yields remain pressured, led by the 10-year benchmark note sitting at 2.879%, dropping four-and-half basis points, a headwind for the greenback. The US Dollar Index, a gauge of the buck’s value vs. a basket of peers, declines sharply from around daily highs and is at 104.367, down 0.19%.
Late in the New York session, market sentiment shifted positive, despite European stocks finishing with losses. Despite investors’ growing concerns that an aggressive Federal Reserve could cause a recession, US stocks are recording gains during the day. The aforementioned, alongside China’s struggling with Covid-19 lockdowns, threatens to derail the global economic recovery.
Earlier in the New York session, the New York Fed President John Williams expressed that the number one issue for the Fed is inflation, and it is running far too high and stubbornly persistent. Williams stated that 50-bps rate hikes make sense at upcoming meetings
The US economic docket would feature additional Fed speaking led by Fed Chair Jerome Powell on Tuesday. Regarding macroeconomic data, April’s Retail Sales, Industrial Production, Building Permits, and Initial Jobless Claims would shed some light regarding the actual economic status of the United States.
Silver Price Forecast (XAG/USD): Technical outlook
XAG/USD remains downward biased, despite rallying in the last couple of days. The daily moving averages (DMAs) are still above the spot price, meaning that bears are in control unless silver bulls conquer February’s 3 pivot low at around $22.00, which would mean that the trend would shift from bearish to neutral-bearish.
However, the jump from the oversold territory of the Relative Strength Index (RSI) at 35.04 could add some support to the bounce at the YTD lows around $20.45, but unless it breaks the RSI’s trendline drawn at around the 50-midline, XAG/USD remains downward pressured.
That said, XAG/USD’s first support would be $21.00. Break below would expose the YTD low at $20.45. Once cleared, the next support would be July 17, 2020, at a daily low at $18.93.
US crude oil futures settle at $114.20
- Up $3.71 or 3.36%
The price of WTI crude oil futures are settling at $114.20. That’s up $3.71 or 3.36% the high price for the day reached $114.90. The low price was down at $108.11.
Technically, the price moved above a topside trend line today near $110.10. The price also moved above the swing high from May 5 at $111.37. The pair traded to the highest level since March 25. The next target comes against the March 24 high at $116.64. It would take a move back below the $111.37 level to give the sellers more comfort, followed by a move back below the broken trend line near $110.10
EU News
European equity close: Mixed bag as a new week gets underway
- Closing changes for the main European markets
- Stoxx 600 -0.4%
- UK FTSE 100 +0.5%
- German DAX -0.6%
- French CAC -0.4%
- Italy MIB flat
- Spain IBEX +0.1%
Other News
BOE Bailey: Over 80% of UK inflation overshoot is due to energy/tradable goods
- Testimony before the UK treasury committee begins
Highlights from testimony:
- over 80% of UK inflation overshoot is due to energy/trad-able goods
- I am not happy about inflation outlook, this is a bad situation to be in
- it is accepted practice to accommodate supply shocks 1 of they are transient and focus on a 2nd round of facts
- a key question is whether self sustained momentum and domestically generated inflation will remain even as Slack in the economy is expected to open up
- I do not think we could reasonably have done anything differently on monetary policy
- Latest Chinese data this morning was very weak longer delay between real income squeeze leading to weakness in demand and a turnaround in the labor market means more risk higher inflation expectations become embedded
- Not out of place to describe Covid impact on demand patterns in the UK as transient, unlike in the US
- Expects unemployment rate to come down from its current 3.8% range
- Labor force has been decreasing. The persistence and scale has been a surprise to us and is significant
Bank of England’s a Saunders:
- my hunch is that activity will be more resilient than the MPR forecast annual report to treasury committee
- we should lean strongly against the risk of high inflation expectations
Hungary’s PM digs in on opposing Russian oil ban
- No sign of a breakthrough in talks
Hungary Prime Minister Victor Orban is in parliament today and warning that the energy crisis and rate hikes will bring about an ‘era of recession’ in Europe.
He’s ramped up his rhetoric in opposing a Russian oil ban, saying that he doesn’t want people in Hungary paying extra for oil.
The EU is pressuring him to stop blocking the Russian oil ban but he’s asked for a 5 year exemption and 17-18B euros in subsidies to rebuild its refineries and infrastructure to orient them away from Russia. Another option is that the EU doesn’t ban direct pipeline exports from Russia.
“Some diplomats now point to a May 30-31 summit as the moment for agreement on a phased ban on Russian oil, probably over six months, with a longer transition period for Hungary, Slovakia and the Czech Republic,” Reuters reports.
Cryptocurrency News
Representatives from 44 countries to meet in El Salvador on Monday to discuss Bitcoin
- Monday May 17
El Salvador is moving close to debt default ever since the country adopted Bitcoin.
Reports say that representatives from 44 countries are to meet in El Salvador tomorrow to discuss Bitcoin.
- 32 central banks’
- 12 other financial authorities