Crude Oil crashed along with other commodities and metals following news from France that they are going into a month-long lockdown. Germany is also extending their lockdown over Easter. This is likely going to be only a short term pullback in markets as Janet Yellen and Jerome Powell continue to support further stimulus in the US.
Most sectors fell overnight, with most Materials stocks leading the sell-off. Which was no surprise considering the pullback in metals. The Banks in the US tend to follow Crude and Bond Yields. We saw buying in the longer-term bonds overnight seeing yields fall off. If this continues, we could see a rotation back into Tech and Growth in the short term.
There is not any consistent theme in the market. It has become very whippy out there as investors and traders wait for a clear path forward with more stimulus and yield control.
We are seeing more and more talk of President Joe Biden’s infrastructure deal. He is talking 3 Trillion whilst many were only expecting 2 trillion. This means more stimulus being injected. The previous fiscal bills were more Stimulus Aid. Whereas this will help create jobs and boost the economy.
The XJO is expected to open fairly flat this morning despite falls in the U.S overnight. Ultimately, we aren’t really tracking the overnight movement, but broadly we are simply tracking sideward alongside the U.S.
Sentiment remains bullish, but the short-term jitters have led to consolidation as our market weighs up local and global factors. This consolidation has tightened, with the range being reduced to support at 6666, and resistance at 6850. The trendline comes in around 6666 and hopefully it applies a bit more upside pressure for our market.
The AUDUSD fell hard and Iron Ore rallied, but other metals were mixed. Hopefully, this is enough to see some bullish moves from our miners today who seem to have bottomed out at this stage.
US shares closed lower overnight, with oil tanking and re-opening stocks faring poorly. At least US treasuries didn’t add to the concerns, with the closely watched 10-year yield falling for the second session in a row overnight. Markets were also shaken by the news that Germany would go into lockdown over easter to try and disrupt the latest surge of COVID-19 infections. Some are arguing that the rising government bond yields, which have so concerned markets across the past few weeks, are simply just bond prices returning to the (historically low) pre-pandemic levels, just like other asset classes have returned to their own pre-pandemic prices.
In US economic data, there were far less new home sales than expected in February, while there was also a greater build-up in US oil inventories. More details are also being release about Joe Biden’s $3trn stimulus plan, which will likely boost equity markets as the bill progresses. Utilities and Telecoms were the strongest performers overnight, while Basic materials and Oil & Gas stocks fared the worst.