Beyond Forex - Metals, Oils, Indices, Bonds, Equities April 3rd

Our weekly breakdown of the CFD instruments that we offer beyond FOREX, including bonds, metals, agricultural commodities, indices, equities and oils. Also visit our economic calendar to learn about this week’s latest and most significant economic events.


Treasuries

Wednesday April 5th sees the release of the latest FOMC meeting minutes and there’s a growing disconnect between interest rates being projected by the market when compared to the narrative coming out of the Fed. In recent days the messages have been just as mixed; members are telling us that after a nine year fight the US economy is back to normal, but on the flipside, dovish undertones appear to be building. If that dovish message fails to be projected in the meeting minutes then T-bill yields could be poised to post some quick improvement.

Gold

Prices for the precious metal have been rather turgid over the last few days and any weakness off the back of a rising dollar has been rather limited. This may suggest that the real potential still lies on the upside here, especially if we seen renewed dollar weakness. This could come off the back of the FOMC minutes, or alternatively the US political landscape has plenty of scope here, too. Donald Trump is struggling to push through reforms as we also have the US budget deadline at the end of April looming. Failure to find a consensus puts the government into a technical shut down – and typically sends the greenback spinning lower too, all of which is likely good for gold.

Agricultural commodities

The USDA issues its first weekly crop report of the year at 9pm GMT on Monday April 3rd. This weekly report published through the growing season could provide some direction for assets including cotton and wheat, especially in this first bulletin if we’re seeing any notable variance from long-term historical averages.

Indices

Friday April 7th sees the release of the US non-farm payroll figure and as always this has the ability to inject some real volatility into equity indices. The numbers are out before the US opening bell, but out of hours trading on both the S&P and the DOW is available. The reactions can often be rather counterintuitive with some quick reversions being posted, so attention ought to be given to stop losses and to ensuring that leverage levels are managed in a realistic manner.

Equities

Last week we saw the eventual break down of the Deutsche Bourse/London Stock Exchange proposed tie up. Since the UK’s decision to leave the EU, this arrangement always seemed doomed but it’s difficult to see the value in the monopoly argument when presumably Deutsche Bourse will now be looking to make further acquisitions in a bid to deter other predators. Any news of hurried acquisitions could serve to unsettle investors and leave recent profits being booked.

Oil

The latest weekly inventory data out of the US showed largely predictable builds in reserves, although there were two factors worth noting. Builds were at a lower pace than had been forecast, whilst there was a draw in inventories at the Cushing storage facility. This is important because the site is nearing full capacity, so in addition to oil prices trending higher, it’s also narrowed the gap between UK and US crude prices. Trading this spread may be worth considering, given the lack of clear directional indicators elsewhere for the commodity, at least in the short term.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.

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