U.S. Equity Markets reversed earlier losses to close firmer on Tuesday after earlier, tech-led weakness reversed into the close. Nvidia (NVDA) managed to close 1% higher with some positive takeaways from its GTC event despite the lack of major surprises. Meanwhile, earlier weakness in tech/indices was catalysed amid Super Micro (SMCI) announcing a USD 2 billion share offering which saw shares tumble. Nonetheless, the pre-market weakness in the Indices gradually pared through the rest of the session. In US Treasuries, the front and belly led a rally amid the soft Canadian CPI figures ahead of Wednesday’s FOMC, note that the long end lagged despite the solid 20 Year Auction. The lower yield environment gave some support to the rate-sensitive areas such as small caps. The Dollar Index was firmer, testing 104, on account of a sell-the-news reaction in the Japanese Yen after the Bank of Japan exited its Negative Interest Rate Policy (NIRP), with USD/JPY hitting four-month highs ahead of 151. Aside from the Fed, luxury names are on watch heading into Wednesday with Kering ADRs and the CAC seeing heavy selling on a negative sales update for its Gucci brand, with cited weakness in APAC, raising concerns on the Chinese consumer. The BoJ ended its era of negative interest rates, as had strongly been guided in recent sourced articles. It raised rates for the first time since 2007 and will keep guiding overnight rates in the range of 0-0.1% and apply a 0.1% interest to all excess reserves parked at the BoJ. It also abandoned its policy of Yield Curve Control but said it will continue its current amount of JGB purchases at broadly the same rate. The central bank will also end ETF and J-REIT purchases. Still, it expects to maintain an accommodative monetary environment for the time being, which analysts said was a signal it does not intend to raise rates again any time soon. Capital Economics said that “it seems likely that the BoJ will continue to shrink its JGB holdings, and it will also discontinue its ETF purchases, but that does not mark a major policy change as the Bank has bought very little ETFs over the past year.” Ahead, CapEco said that the strength of pay hikes in this year’s spring wage negotiations poses some upside risks to its inflation forecasts. “However, we suspect that wage growth among smaller firms won’t be quite as strong as among those firms participating in the Shunto, and with inflation coming off the boil now, it seems likely that trade unions will push for smaller pay hikes in next year’s talks.” CapEco adds that “with wage growth peaking this year, we still expect inflation to fall below the BoJ’s target by the end of the year, so the Bank won’t feel the need to lift its policy rate any further.” Meanwhile, the FOMC is set to keep rates unchanged at 5.25-5.50% this evening. The market’s focus will be on the accompanying Dot Plot with risks the 2024 median forecast may nudge higher to two cuts from December’s three cuts to reflect the recent upside surprises in inflation and growth data. Money Markets have pulled back hawkishly this year to align with the Fed’s December forecast of three cuts in 2024 and now do not have a rate cut fully priced in until July, although a June cut is implied at 60%, where the majority of analysts expect. There is also a risk the neutral rate forecast moves higher. Given the “bumpy” progress on inflation, Chair Powell is likely to remain coy on specifics of rate cut timing after he said the Fed was “not far” from nearing the confidence to begin rate cuts before the hot February inflation data. I also expect to get a more formal acknowledgement that discussions have begun, but not a decision, on the tapering of the balance sheet run-off. Elsewhere, Oil closed a further 1.16% higher while Gold was flat following a quiet trading session.
To mark my 2950th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 114 points yesterday and is now ahead by 1931 points for March. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 points, after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.56% higher at a price of 5178.
The Dow Jones Industrial Average closed 320 points higher for a 0.83% gain at a price of 39,110.
The NASDAQ 100 closed 0.26% higher at a price of 18,032.
The Stoxx Europe 600 Index closed 0.19% higher.
Yesterday, the MSCI Asia Pacific closed 0.6% higher.
Yesterday, the Nikkei closed 0.66% higher at a price of 40,003.
Currencies
The Bloomberg Dollar Spot Index closed 0.38% higher.
The Euro closed 0.1% lower at $1.0862.
The British Pound closed 0.1% lower at 1.2718.
The Japanese Yen fell 1.18% closing at $150.88.
Bonds
Germany’s 10-year yield closed 1 basis points lower at 2.45%.
Britain’s 10-year yield closed 2 basis points lower at 4.17%.
U.S.10 Year Treasury closed 4 basis points lower at 4.30%.
Commodities
West Texas Intermediate crude closed 1.06% higher at $83.60 a barrel.
Gold closed 0.1% lower at $2158.10 an ounce.
This morning on the Economic Front we have German PPI at 7.00am. At the same time, we have U.K. CPI, PPI and the Retail Price Index. Next, we have speeches from ECB President Lagarde at 8.45 am, and Lane at 9.30 am, followed by Euro-Zone Construction Output at 10.00 am. At 3.00 pm we have Euro-Zone Consumer Confidence and a U.S. 20 Year Auction at 5.00 pm. Finally, we have the FOMC Statement at 6.00 pm followed by the Powell Press Conference at 6.30 pm.
Cash S&P 500
We saw plenty of two-way price action in the S&P yesterday before the inevitable rally occurred into the close ahead of the Fed later this evening. The fact is markets have been chopping at the high end of its recent range for the last three weeks with no great progress one way or the other. However, the late rally saw the S&P close within 0.15% of its all-time high. Even Bitcoin falling 6% yesterday could not weigh on stocks as the loosest financial conditions in two years persists. Public Debt increased on Monday by over $57 billion in a day as markets continue to ignore the huge increase in Oil prices over the past week. This oil rise will only add to the CPI rate going forward. Just before the Chicago close the S&P rallied to my initial 5180 sell level. There is no point in being short ahead of Powell this evening. As a result, I emailed my Platinum Members to exit any short position at my revised 5176 T/P level and I am now flat. Given the number of negative divergences and a stock market that has had the longest continuous rally since 1995, I just cannot be a buyer against this background, especially with CPI at 3.8% and rising in my opinion. Steel prices have increased by 30% in the past 12 months. The S&P has strong resistance from 5198/5214 where I will again be a seller with a higher 5231 ‘’Closing Stop’’. Ahead of the FOMC Statement and Powell Press Conference, I will have no buy level in the S&P. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
The Euro traded in a narrow 40-point range yesterday, before closing unchanged in New York. I am still long from last Friday at a price of 1.0875 with the same 1.0910 T/P level. I will continue to look to add to this position at 1.0805 while leaving my 1.0745 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar strengthened following the BoJ’s interest rate rise. This move higher saw my second sell level at 103.90 executed for a now 103.65 average short position. I will now raise my T/P level to 103.30 while leaving my 104.45 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
I am still flat the DAX as the market again traded in a narrow range. The Weekly RSI is still fried to the upside. The DAX has resistance from 18130/18230. I will now raise my sell level to this area while leaving my 18305 tight ‘’Closing Stop’’ unchanged. If I am If I am taken short, I will have a T/P level at 18055.
Cash FTSE
Unfortunately, the FTSE just missed my initial 7680 buy level before having a small rally into the close. Given how much the FTSE has underperformed, I am still happy to be a buyer of the market on dips. This view will hold as long as long as the market does not close below 7570. Today, I will be a buyer from 7610/7680 with the same 7550 ‘’Closing Stop’’. I still do not want to be short the FTSE at this time. If this view changes, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
After the Dow reversed its morning sell-off, the market rallied to my 39100-sell level. Anticipating that the Dow would stay ‘’bid’’ ahead of this evenings’ FOMC Statement, I emailed my Platinum Members to exit any short position at my revised 39024 T/P level and I am now flat. The Dow still has not made a new high over the past three weeks. However, any sell-off has been muted adding to the frustrating price action since the end of February. The Dow has resistance from 39280/39530 where I will again be a seller with a higher 39705 wider ‘’Closing Stop’’. I still do not want to be long the Dow at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Frustrating as the NDX missed yesterday’s initial 17800 buy level by just nine points before rallying over 200 points off this low print into the Chicago close. Today, I will raise my buy level slightly to 17720/17870 with a higher 17595 ‘’Closing Stop’’. I still do not want to be short the NDX at this time. If this view changes, I will be back with a new update for my Platinum Members.
March BUND
No Change: The Bund traded in a narrow range yesterday as Bond Markets go on hold ahead of this evening’s FOMC Statement and Powell press conference. I am still long at 131.94 with the same 132.45 T/P level. I will continue to add to this position on any further move lower to 131.20 while leaving my 130.55 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
I am still flat as Gold traded in a narrow range over the past 24 hours. I will continue to be a buyer on any dip lower to 2120/2136 with the same 2105 lower ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2147.
Silver Rolling Contract
No Change. Despite Gold trading lower since Thursday, Silver has eked out a small gain. I am extremely bullish of Silver over the medium term as I believe that Silver is one of the cheapest asset classes in the market. I still retain 50% of the original 100% stake that I put into my pension last year. Today, I will continue to be a buyer on any dip lower to 23.80/24.60 with no ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 25.70.
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