Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Gold Shows Strength, While Expectations Of Poor Earnings Loom

By Stephen InnesMarket OverviewApr 14, 2020 05:02AM ET
www.investing.com/analysis/defensive-tilt-into-the-ny-open-200521527
Gold Shows Strength, While Expectations Of Poor Earnings Loom
By Stephen Innes   |  Apr 14, 2020 05:02AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Stock Markets

The market remains underwhelmed by the OPEC + deal. Still, miners have picked up with the bounce in gold, and some relative outperformance in industrial metal prices helped by better-than-expected Chinese trade data. But I doubt this will stick due to the backlogged export data, which likely skewed the export component higher.
 
Again, I can't help but think we're going to have a slightly defensive tilt into the NY open as investors weigh the recent sharp rally on signs of peak COVID-19 ahead of what could be a series of poor corporate Q1 numbers.
 
Equities have been boosted by the stabilization of financial conditions in early March, led by global monetary and fiscal as well as an evident flattening of the infection curves in most developed countries. But given the expected cuts to earnings, it's difficult to envision much positive follow-through over the next 24-48 hours.
 
The currency market merry go round

Asia currency markets are a mixed bag after the China trade balance narrowed, although both export and import were better than expected in percentage terms. And when factoring in the backlogged export data, it's not that significant of a local FX driver, although the data is better than expected.
 
The USD/CAD has been trading within a 20 pips range most of the day, and action has been driven by the OPEC+ oil output deal. While the overall outcome was on the lower end of market expectations, it still showed that the oil-producing countries are willing and able to work together to reach a consensus that is being viewed positively in currency land. But that narrative will likely give way the instant oil prices wobble.
 
Australia March NAB business confidence index -66, after -2 in February Despite the horrendous print, AUD/USD punched higher as market discounting the accuracy of survey data. But its starting to feel like 2009 all over again where bad news is met with increased policy support expectations and the markets continue to rally. But the Aussie is paring interday longs as currency traders think the S &P 500 could be in for a bit of risk wobble in the NY session.
 
The oil market bid is thin

Traders are not looking to build any length in the oil market right now. Or at least until they get a quantifiable picture of Aprils absolute demand devastation. So given the laws of supply and demand dynamics, it suggests it suggest the path of least resistance should be lower over the short term, which could be a thorn in the side of risk sentiment.


The gold market bid is robust

After an Asia session dotted with profit-taking in Asia gain,  gold prices have come roaring back on robust demand out of London. The narrative is pretty clear; macro investors are deeply concerned about the underlying global economy, especially ahead of essential data and critical earnings reports that could paint a horrific picture of the economy.
 
And with central banks, are delivering "whatever it takes" to support equity markets, which is driving yields on debt instruments to zero, this increases physical demand for precious metals as opportunity costs evaporate.
 
To be sure, we are currently in the worst type of investment climate, and it isn't likely to change any time soon. The economy is certainly in a recession already, the depth and length of which is impossible to gauge. At some point, though, growth will accelerate, or the dollar will fall, and a new trend will start.

Gold Shows Strength, While Expectations Of Poor Earnings Loom
 

Related Articles

Gold Shows Strength, While Expectations Of Poor Earnings Loom

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email