Daily Market Update Apr 8
Relatively quiet session on price action overnight. SPX reversed the declines in Asia and Europe and managed to close above the 4.5k level once again. Healthcare and staples sectors led gains with Tech turning marginally positive as well. Energy came back strong despite Crude trading softer as Brent is now testing the 100 support level. Healthcare (YTD +0.7%) and Staples (YTD 1.6%) now join Utilities (YTD +7%) and Energy (YTD +39%) as the only sectors in the green this year. Financials continue to struggle despite the hawkish Fed and are down close to 4% YTD.
Zelensky confirmed the popular opinion that Russia was not serious about achieving a diplomatic solution to the conflict and they could be getting ready to launch more offensives in the east and possibly around Kyiv. The US joint chief said the war was likely to be 'a long slog' and a swift resolution was not to be expected.
The EU followed through on banning Russian coal, albeit with a 4-month phase-in period. While this does not affect the all-important gas imports, it is at least a start in reducing Russia's energy export economic lifeline. The UN also suspended Russia from the human rights council (again, not the security council, but at least a start) - and it was a telling sign of factionalism that 58 countries still abstained.
Fed speakers kept the hawkish pressure on overnight but the 2s10s has steepened back close to 20 bps as the 10Y pulled up to the 30Y around the 2.65% mark. The 5Y yield continues to stay elevated for now.?ECB minutes showed that a hike might be possible in Q3 this year after the asset purchases stop in June but of course, the key variable remains the war at its doorstep. US weekly unemployment data was mixed with fewer first-time claims but a significant rise in continuing claims. Ahead today, the RBI is expected to hold on rates while continuing to attempt a balance between inflation and growth.
" Investors should purchase stocks like they purchase groceries, not like they purchase perfume."
Ben Graham