North American News
US equities end the day lower, led by tech
- Closing changes for the main North American markets
Stocks tried both sides today but tech was an anchor on the market throughout the day.
- S&P 500 -0.2%
- Nasdaq Comp -0.5%
- DJIA -0.2%
- Russell 2000 -0.2%
US sells 5-year notes at 3.665% vs 3.675% WI
- Strong demand
- Prior was 4.109%
- Bid-to-cover 2.48 vs 2.48 prior
- Indirects 68.58% vs 69.9% prior
- Direct 18.2% vs 19.0% prior
US February advance goods trade balance -91.6B vs -91.0B expected
- US trade balance data for February 2023
- Prior was -91.5B
- Exports came in at $167.8 vs $173.8 billion in January
- Imports came in at $259.5B vs $265.3 billion in January
US March consumer confidence 104.2 vs 101.0 expected
- US consumer confidence for March 2023
- Prior was 102.9 (revised to 103.4)
- Present situation index 151.1 vs 153.0 prior
- Expectations index 73.0 vs 69.7 prior
- 1 year inflation 6.3% vs 6.3% prior
- Jobs hard-to-get 10.3 vs 10.5 prior
- 14.9% expect their incomes to increase, up from 14.4% last month
US March Richmond Fed services index -17 vs -3 prior
- US March 2023 Richmond Fed services and composite index
- Prior was -3
- Composite index -5 vs -16 prior
- Manufacturing shipments +2 vs -15 prior
US February wholesale inventories +0.2% vs -0.4% prior
- US wholesale and retail inventory data
- Prior was -0.3% (revised to -0.5%)
- Retail inventories ex autos +0.4% vs +0.1% prior (revised to 0.0%)
Commodities
Gold to average $2,000 over Q4 as Fed pivots – ING
Concerns over the banking sector have led to a move towards safe haven assets and Fold has clearly benefited from this. While economists at ING see a short-term pullback in prices, we expect these to strengthen over the second half of the year.
Fed policy should support Gold later in the year
“Fed policy is likely to be key for Gold over the medium term. We see a final 25 bps hike in May, which would leave the Fed funds range at 5-5.25%. Rate cuts will likely then become the theme for 2H23, and we see the Fed cutting by 75 bps in the fourth quarter. We would expect real yields to follow policy rates lower later in the year, which should prove supportive for Gold prices.”
“Whilst we expect a pullback in prices in the short term, we see Gold prices moving higher over 2H23 and expect spot Gold to average $2,000 over 4Q23. The assumptions around this are that we do not see further deterioration in the banking sector and that the Fed starts cutting rates towards the end of this year.”
WTI crude oil surges above $73.50 amid supply concerns and risk-on sentiment
- After a Kurdistan/Baghdad arbitrage decision, supply risks halted 450K barrels of exports through Turkey.
- A soft US Dollar underpins US crude oil benchmark prices.
- WTI shows neutral to downward bias, but oscillators turned bullish, suggesting further upside.
Western Texas Intermediate (WTI), the US crude oil benchmark, climbs in the mid-North American session, spurred by crude oil supply issues. In addition, a risk-on impulse weakened safe-haven assets, like the greenback. At the time of writing, WTI exchanges hands at $73.55 a barrel.
WTI experienced a $3 jump after a halt of 450K barrel exports from Iraq Kurdistan region through Turke, spurred by an arbitration ruling that validated that Baghdad’s approval was necessary to transport the oil.
Meanwhile, sentiment shifted after First Citizens BancShares acquired Silicon Valley Bank (SVB) deposits and loans. That propelled a recovery in global bank shares as a banking system crisis waned.
Therefore, safe-haven assets, like the US Dollar (USD), tumble across the board. The US Dollar Index (DXY) drops 0.38% to 102.449. A weaker greenback makes oil cheaper for international buyers and lifts WTI’s price.
Russian President Vladimir Putin’s announcement to deploy tactical nuclear weapons in Belarus to intimidate the West increased oil prices due to its support for Ukraine. NATO described Putin’s comments as “dangerous and irresponsible.”
At the same time, Russia’s Deputy Prime minister Alexander Novak commented that Moscow is close to achieving its 500K crude output, to about 9.5 million bpd.
EU News
European equity close: Second day of gains this week
- Modest gains for European stock markets
- Stoxx 600 flat
- German DAX +0.1%
- UK FTSE 100 +0.2%
- Spain IBEX +0.4%
- Italy MIB +0.4%
- French CAC +0.2%
ECB’s Muller: It is still possible to hike rates further
- Remarks by ECB policymaker, Madis Muller
- There may be more differing opinions at the next ECB meeting
- Underlying inflation remains an area of concern
- We must still be worried about upside inflation risks
Other News
Last week was a stock-pickers’ delight
- BofA saw heavy stock buying last week
Bank of America reports that clients funnelled the largest sum of money into us equities last week since October, with investor preference for individual stocks over exchange-traded funds reaching a record level. There were inflows of $3.7 billion in what was the fourth consecutive week of buying, led by institutional clients.
“Clients bought stocks in seven sectors, led by tech and healthcare (biggest healthcare inflows since Dec. 2021). Tech has seen buying every week but one YTD,” BofA reports. “Energy stocks saw the biggest outflows after the prior week’s record inflows. Clients bought Financials for the fourth straight week; both institutional and retail clients were buyers,” BofA strategists wrote in a client note. Materials attracted inflows again and now have the longest buying streak (nine weeks). On the other hand, buybacks were light with the strategists noting that buybacks tend to slow over the next three weeks into earnings.
Cryptocurrency News
Sam Bankman-Fried accused of bribing Chinese officials
- Directed $40 million bribe
The troubles for FTX founder Sam Bankman-Fried continue to mount. He’s been charged by US officials under the foreign corrupt practices act. The charge said he authorized an initial $40 million bribe to unfreeze accounts in China, paid in cryptocurrency to one or more Chinese officials.
After confirmation the accounts were unfrozen, there were ‘additional tens of millions’ of payments to complete the bribe.
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