Global Economic Daily - 26/03/2024
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Quote of the Day: The greatest glory in living lies not in never failing, but in rising every time we fail. – Nelson Mandela
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Equities: Stocks slipped Monday to start a shortened trading week as the rally that brought Wall Street to record levels took a breather. The?Dow Jones Industrial Average?fell 162.26 points closing at 39,313.64. The?S&P 500?dipped 15.99 points to finish at 5,218.19, while the?Nasdaq 100?was down 62.38 points and settled at 18,277.06. The market is on track for its fifth consecutive month of gains, with the major U.S. stock benchmarks crossing new all-time closing high levels last week. The S&P 500 added roughly 2.3% last week, while the Dow gained just under 2%?for its?best week since December, nearing the 40,000 level. The Nasdaq Composite, meanwhile, jumped about 2.9% during the period. These advances were fueled by the Federal Reserve’s latest remarks that?maintained central bankers’ rate-cutting timeline?for this year, as well as investors’ ongoing enthusiasm for tech stocks amid the AI-powered rally.?Overall investor sentiment remains above its historical average, according to the latest weekly American Association of Individual Investors’?sentiment survey, reflecting persistent market optimism. Still, some investors fear the potential impact of an overextended rally and higher-for-longer interest rates. Sam Stovall, chief investment strategist at CFRA Research, also noted that equities have gotten expensive, with the S&P now trading at a 33% premium to its average price-to-earnings ratio over the last 20 years, he said. This week, investors will gain further insight about the path of inflation from the February personal consumption expenditures price index, the Fed’s preferred inflation gauge, released Friday morning. The market’s reaction will be determined on the following Monday, given the Good Friday holiday. TECHNICAL OUTLOOK - The Dow and S&P are above the 14, 21 day moving average.
Crude Oil: Oil prices settled higher on Monday as orders from the Russian government to curb oil output, and attacks on energy infrastructure in both Russia and Ukraine offset the United Nation's demand for a?ceasefire in Gaza. Moscow, meanwhile,?has ordered companies?to reduce oil output in the second quarter to meet a production target of 9 million barrels per day by the end of June, in line with its pledges to the producer group OPEC. Russia is committed to the OPEC cuts. They are looking beyond the current supply and demand fundamentals and looking at unity with OPEC, as well as the risk of a bigger price shock further down the road. Attacks on Russian energy facilities and Ukrainian energy infrastructure have stoked supply concerns. Another Russian oil refinery had half of its capacity knocked out in a drone attack over the weekend, sources told Reuters. It was the?latest casualty?from a string of attacks by Ukraine this month that have shuttered 7% of total?refining capacity. Russia attacked Ukrainian generating and transmission facilities last week and over the weekend, causing blackouts in many regions. Elsewhere, the United Nations Security Council adopted a resolution on Monday?demanding an immediate ceasefire?between Israel and Palestinian militants Hamas and the release of all hostages after the United States abstained from the vote. Yemen-based Houthi rebels have been ramping up attacks on ships traversing the Red Sea in support of Palestinians in Gaza. A ceasefire could help relieve supply bottlenecks if the Houthis wind down their attacks by allowing vessels to use the Suez Canal rather than taking longer, more costly diversions around the horn of Africa. TECHNICAL OUTLOOK – The Crude is above the 14, 21 day moving average.
Metals: Gold prices are posting decent gains in midday U.S. trading Monday, supported by chart-based buying amid bullish technical, and by friendly daily “outside market” forces that see the U.S. dollar index lower and crude oil prices higher. Silver prices are trading slightly up. Technically, April gold futures bulls have the solid overall near-term technical advantage. A five-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the contract and record high of $2,225.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,149.20. May silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the March high of $25.975. The next downside price objective for the bears is closing prices below solid support at $23.50. TECHNICAL OUTLOOK – Gold and silver are above the 14, 21 day moving average.
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