Week Ahead: Oil and Stocks

Week Ahead: Oil and Stocks

OPEC++ agreed to a cut in boring of 10 million bpd in principal, however, Mexico isn’t “all in” and should throw the deal into chaos. European finance ministers agreed on a rescue package worth roughly $540 billion Euros. Will this be enough to support the delicate EU? Stock markets are acting just like the worst of the coronavirus is behind us, but why then is that the Fed throwing $2.3 trillion at small businesses and increases stimulus? in the week are going to be all about watching if promises are held among OPEC++ countries. additionally , traders are going to be expecting signs to work out if the worst of the coronavirus is behind us.

OPEC and Russia seem to possess settled their differences between one another and brought the remainder of oil producing countries together to debate boring cutbacks. The result was an agreement by the planet cutback boring by 10 million barrels per day. However, at the time of this writing, Mexico isn’t fully on board with the plan, although the US is offering assistance to assist Mexico meet their cutback quota.

The pace of increase within the number of coronavirus cases worldwide seems to be decreasing. Many are watching this as a chance to shop for stocks as “things can only get better”. The S&P 500 was up nearly 12% in the week , retracing over 50% of its highs from February 20th to the lows on March 23rd. The Dow Jones was up 12.7% and Nasdaq up 9.37%. within the UK, the FTSE was up 8.66%, while in Germany in DAX was up 11.95%. The DXY was down -1.19%, with the AUD/USD leading the way vs the US Dollar closing +5.94%. Gold and silver also had nice weeks, with Gold closing the week +4.86% while silver was +6.64%. Which brings us to Crude Oil….2 weeks ago, WTI petroleum was up 32% with expectations of a positive outcome from the OPEC++ meeting. However, as meetings concluded in the week , price was down 19.15%, a classic case of “buy the rumor sell the fact”.

Stock markets are either during a new market or market rally. Regardless, as previously mentioned, they're up 50% from their lows in late March. Does this mean that the worst of the coronavirus is behind us? Although some countries feel they'll have peaked or are at their peak, many countries are still seeing signs of accelerating cases and increasing deaths. So why has the stock exchange retraced such a lot of its losses? presumably it's due to efforts of Central Banks round the world creating stimulus to avoid a worldwide depression. “Don’t fight the Fed” is an expression that has been said so often since 2008. therein context, traders attempt to get before the Fed before they “theoretically” backstop the economy and markets. Just yesterday, the US Federal Reserve System threw another $2.3 trillion at the markets while the BOE said it might allow Britain’s government to run a vast overdraft to pay wages to many people laid off, cut taxes for businesses, and expand the welfare system. US Fed Chairman Donald Powell even said yesterday that US banks don’t got to suspend dividend payouts! Questions will continue in the week as traders digest daily data from the amount of coronavirus cases every day from round the world and whether Central Banks have done “enough”.

In the US primary elections, Democratic candidate Bernie Sanders suspended his campaign. This leaves only Joe Biden to face Donald Trump within the US elections in November. Once the coronavirus is contained, things are going to be “messy” between these 2 contenders.

Earnings season for Q1 kicks off next week with many of the Wall Street banks reporting. These include JPM and WFC on April 14th and C, BAC, and GS on April 15th. Estimates are poor for many companies and a few are even withdrawing future outlooks for the remainder of the year given the uncertainty surrounding the coronavirus.

There is some economic data in the week , though the foremost watched are going to be from China. for many other countries the info is second tier for the foremost part. The Bank of Canada meets this week; however, it's likely to be a non-event given what proportion stimulus the BOC has provided so far . Below may be a list of the more important data releases:

Tuesday

Australia: NAB Business Confidence (MAR)

China: balance of trade (MAR)

China: Vehicle Sales (MAR)

China: FTI -YTD (MAR)

Wednesday

Australia: Westpac Consumer Confidence (APR)

China: New Yuan Loans (MAR)

US: Retail Sales (MAR)

US: Beige Book

Canada: BoC rate of interest Decision

Thursday

Australia: Employment Change (MAR)

Germany: balance of trade (MAR)

US: Initial Claims (week ending April 11th)

US: Housing Stats (MAR)

US: Building Permits (MAR)

US: Philadelphia Fed Manufacturing Index (APR)

Friday

China: GDP(Q1)

China: Industrial Production (MAR)

China: Retail Sales (MAR)

China: Fixed Asset Investment – YTD (MAR)

Price action has retraced 50% from the highs of February 20th to the lows on March 23rd! If price gets a daily close above 2800, there's no reason price can’t run to 2900. However, from here the market has work to try to to . Between 2900 and 3000 there are 2 levels of horizontal resistance, the 61.8% Fibonacci retracement level from the previously mentioned time-frame , and therefore the 200 Day Moving Average. One can even argue that the S&P 500 has broken out of a pennant formation and targets 2980! If price can’t push higher, support is lower at previous resistance near 2640. Below that support is at rock bottom of the pennant near 2435. this may be a really important chart to observe because the direction of equities contributes to the direction of numerous assets, like bonds, commodities, and therefore the US Dollar.

Everyone, please stay safe this weekend and remember to always watch your hands!!