Tiomarkets Daily Commentary 13 April 2020

A new week begins after a holiday weekend with only a few countries re-opening to get us started. An OPEC+ agreement over the weekend would see 9.7 million barrels a day slashed from global oil production. Covid-19 headlines from Europe and the US give conflicting evidence on the spread of the pandemic. While new cases and hospital admissions begin to plateau and even decrease in some cases, the number of deaths have still been climbing. On the bright side there are the first signs of lock-downs being scaled back, with certain businesses being allowed to re-open in Austria, Denmark and even hard-hit Spain. Even headlines such as Italian football authorities looking to test players at the beginning of May so a resumption of the season can follow, give a ray of hope to some return to normalcy.


Monday itself would be dominated by the US session, with much of Europe still out for official holidays. The much-anticipated cut in Oil production was already priced in and failed to have much of a positive affect on market prices. By the end of the day US crude was down almost 1% at $22.55 a barrel. One commodity that did enjoy a rally was gold, soaring through the early March high near $1,703 to a high just over $1,722 an ounce. With hopes that the pandemic is plateauing, focus is returning to the longer-term economic consequences of Covid-19. When and how economies open back up as well as how long it will take for a meaningful recovery, has many investors running to the safe haven of gold. For FX lower equities would see a weaker USD with USDJPY down to 105.50 and GBPUSD up to 1.2535. USDCAD would drop to 1.3856 as AUD briefly hurdled 0.6400. EURUSD would be the odd one out of the major pairs, dropping briefly below 1.0900 before recovering to 1.0920 by the end of the day. US equities would generally be weaker, but the tech-heavy Nasdaq benefited from a 5% rally in Amazon. By the close of Wall Street the DJ was down over 320 points or 1.4%, led mostly by an 8% drop in Caterpillar stock. However the Nasdaq would end higher by just shy of 0.5%. Earnings season in the US is now upon us – should be interesting. Real interesting.

Gold was the big mover today. The question is, will it hold and build on these gains, or will this move over $1,700 end like the last one with a pullback? The recent volatility makes that call harder than usual, but looking at this daily chart, we can see the next major resistance is between $1,790 and $1,800, levels not seen since 2012-2013. Any short-term failure to hold above $1,690-$1,700 would be frustrating to the bulls.