Global Economic Daily - 05/03/2024
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Closing Commentary
Quote of the Day: The more refined and subtle our minds, the more vulnerable they are. – Paul Tournier
Equities:
Stocks retreated Monday, pushing the S&P 500 and Nasdaq Composite off all-time highs, despite a rallying group of technology stocks tied to the artificial intelligence boom. The S&P 500 shed 6.13 points to 5,130.95, while the Nasdaq 100 slipped 76.43 points to 16,207.51. The Dow Jones Industrial Average lost 97.55 points to finish at 38,989.83. With those drops, the broad S&P 500 and technology-heavy Nasdaq returned to charted waters after notching new records last week. Monday’s losses come as the market has largely raced higher over the past several weeks, fueled by AI-focused excitement. The technology-heavy Nasdaq registered an all-time high on Friday, breaking a 2021 record to become the last of the major stock indexes to reach a record close this year. This week, traders will look for clues about the future direction of interest rates from Federal Reserve Chair Jerome Powell. The central bank leader is expected to deliver monetary policy updates to the House of Representatives on Wednesday and to the Senate on Thursday. The ADP Employment Survey and January job openings data will be released on Wednesday, providing further insight into the labor market. Manufacturing and nonfarm payrolls data for February are due Friday. TECHNICAL OUTLOOK - The Dow and S&P are above the 14, 21 day moving average.
Crude Oil:
Oil prices settled slightly lower on Monday, as demand headwinds counterbalanced a widely expected extension of voluntary output cuts through the middle of the year by the OPEC producer group. OPEC is extending their voluntary oil output cuts of 2.2 million barrels per day into the second quarter to support prices amid global growth concerns and rising output outside the group. However, the end of a warm winter across the northern hemisphere is weighing on oil prices despite the OPEC announcement. U.S. product supplies of distillate fuel oil, which includes heating oil, declined in December to 3.61 million barrels per day, down about 10% from November and the lowest since June 2020, data from the Energy Information Administration showed last week. Talk of a ceasefire in Gaza was also weighing on oil prices. Russia's announcement that it was cutting its oil output and exports by an additional 471,000 bpd in the second quarter surprised some analysts. Russia's additional cut is closely correlated with a 400,000 bpd drop in its refinery runs, largely stemming from Ukrainian drone strikes on refining assets across Russia. The OPEC cuts will lead to lower production from the group at 34.6 million bpd in the second quarter, against an earlier forecast that output could rise above 36 million bpd in May as producers unwind supply cuts. U.S. crude inventories are forecast to have risen by 2.6 million barrels last week. TECHNICAL OUTLOOK - The Crude is above the 14, 21 day moving average.
Metals:
Gold and silver prices are solidly higher in midday U.S. trading Monday, with gold hitting a three-month intra-day high and silver a two-month peak. Nearby Comex gold futures are set to close at a record-high close today. The all-time intra-day high in nearby gold futures was set in December of last year, at $2,130.20. Technical buying is featured today as the near-term charts have quickly turned bullish for both metals. There are also growing notions the Federal Reserve could begin to lower U.S. interest rates in June. Technically, April gold futures prices hit a three-month high today. Nearby gold futures also closed at a record-high close today. The bulls now have the solid overall near-term technical advantage. A three-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the record high of $2,130.20, basis nearby futures. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,050.00. May silver futures prices hit a two-month high today. The silver bulls have the overall near-term technical advantage and have momentum. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at last week’s low of $22.47. TECHNICAL OUTLOOK – Gold and silver are both well above the 14, 21 day moving average.
DISCLAIMER: The Information and data contained herein was obtained from sources deemed reliable. The accuracy and completeness are not guaranteed
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