News & Analysis

Stocks recover – Syria strike worries ease – Earnings back in focus; Oil hits 3-year highs – Gold dumped; USD mixed – jumps to the JPY

Apr 13, 2018 | Daily Market Outlook

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US markets – rebounded on Thursday as fears of a military strike on Syria eased. Corporate earnings are also back in focus with reporting to start today. The Dow Jones rallied 293.60, the S&P500 added 21.80 and the NASDAQ closed 71.22 higher. In a tweet, President Trump said: “Never said when an attack on Syria would take place. Could be very soon or not so soon at all! In any event, the United States, under my Administration, has done a great job of ridding the region of ISIS. Where is our ‘Thank you America?'” This comment confirmed a delay in a possible strike, futures jumped on the news. Bank shares led the gains, with J.P. Morgan Chase, Citigroup and Goldman Sachs all climbing more than 2 percent.

“The risk of earnings disappointing have increased,” said Michael Arone, chief investment strategist at State Street Global Advisors. “This quarter, we’ve seen expectations for earnings go up. If we don’t meet them, that could be at risk.” Citigroup, J.P. Morgan Chase and Wells Fargo are among the companies scheduled to report Friday morning.

European markets – finished in the black, buyer sentiment boosted by easing tensions. The FTSE added 1.20, the DAX closed 121.04 higher and the CAC closed 31.28 higher. Technology surged ahead to close as the best performing sector, 1.4 percent in the green. British hedge fund Man Group traded at the top of the European benchmark throughout the day, closing 8 percent higher on earnings news. The GER30 daily is trading above March 12 closing highs.

Oil – closed at three-year highs last night moving above $67 for the second time but managing its first close above $67. The escalating crisis in Syria lifted crude prices to their highest levels since late 2014. OPEC said the global oil stocks surplus was close to evaporating due to healthy energy demand and its own supply cuts. OPEC Secretary-General Mohammad Barkindo told Reuters in New Delhi the global oil glut has effectively shrunk by nine-tenths since the start of 2017. “We have seen an accelerated shrinkage of stocks in storage from unparalleled highs of about 400 million barrels to about 43 million above the five-year average,” Barkindo said. Barclays said that geopolitical events could keep Brent prices elevated above $70 in April and May, but a downward correction was possible in the second half of the year.

Forex – risk had a mixed to flat night to the USD but made good gains to the Japanese Yen. The USD made strong gains to the Japanese Yen adding 55 pips, with further gains this morning. The USDCAD faded after making a brief rally. Healthy oil price continued to boost the CAD. The EURUSD traded 37 pips lower, the AUDUSD finished flat and the GBPUSD closed 61 pips higher also touching new monthly highs and testing March high at 1.42441. The majors all gained to the JPY, this morning we’re seeing new monthly highs from the AUDJPY and GBPJPY has hit new yearly highs. Buyers closing in on a 153.00 test. Gold was dropped last night as tensions eased. Price closed $18 lower returning to its long-term price range. Bitcoin jumped last night adding 833, price trading back above 7800.

USDJPY – price continues to drive higher, buyers testing range high this morning. A break higher and could see another shot at 108?

Good trading from Eightcap.

Sources; CNBC. All times are AEST

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