Daily Market Update Apr 27

Equities fall againSPX declined overnight was outside the ordinary range with the headline index down 2.8% and closing below the 4200 support level it had bounced off earlier. All sectors were in the red except Energy, which managed a +0.14% gain on the day. This brings the YTD gains in the sector to around 32% now and only two other sectors are in the green this year - Utilities at +1.9% YTD and Staples at +1.6% YTD. The fact that these are the most defensive is telling of the general sentiment and Financials, which are generally expected to do well in a rising rates environment, are down over 9% YTD.

The yield curve moved lower with the 10Y below the 2.75% level now, less than a week after threatening to break above 3%. The broad shape of the curve stayed the same - 2s10s around 20 bps and 5s10s mildly inverted. The 10Y real yield is slowly rising towards zero once again. Commodities saw broad gains yesterday with Brent bouncing off the 100 support level. WTI is now once again trading above the mark too. Russia announced a halt in gas supplies to Poland and Bulgaria from next week after they refused to make payments in RUB - likely a warning signal to Germany and the rest of the allied nations.

The war in Ukraine is still doing significant damage with the UN secretary-general stating after meeting Putin that he had 'agreed in principle for the Red Cross to help evacuate trapped civilians from Mariupol. Russia remains committed to the offensive and any ceasefires for humanitarian corridors have been hard to come by. We had inflation numbers in Australia come in higher than expected this morning and have the US weekly crude inventories later in the day.

Have a great day ahead

“Fear incites human action far more urgently than does the impressive weight of historical evidence.”

Jeremy Siegel