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Opening Bell: Oil Jumps; Stocks, Futures Fall As Negotiation Hopes Fade

Published 03/30/2022, 08:16 AM
Updated 09/02/2020, 02:05 AM
  • Yield curve flashes recession warning
  • Bitcoin climbs for nine days straight
  • Apple (NASDAQ:AAPL) rally longest since 2003

Key Events

US futures for the S&P 500, Dow Jones, NASDAQ, and Russell 2000, and European shares were lower on Wednesday as skepticism escalated regarding the success of current Ukraine-Russia peace talks. Ukrainian military leaders have voiced doubt about Russia's sincerity regarding a cessation of hostilities, characterizing any military retreat as a maneuver simply to mislead.

Fading hopes of a ceasefire pushed oil prices into a rebound and the US dollar softened.

Global Financial Affairs

Late last week, Bank of America warned that the 11% jump in US stocks in the past two weeks is a telltale sign of a bear-market rally, saying the surge occurred despite weakening fundamentals.

Another signal BofA cited is a central bank that turns very hawkish. The lender cautioned that sharp rallies are typical of bear markets, with analysts reminding investors of the dot-com and 2008 crashes.

Another leading indicator of such events is the yield curve, with many focusing particularly on 2-year/10-year Treasuries. In a healthy economy, debt holders of longer-term maturity dates are rewarded for their patience and commitment with higher yields than those received by holders of shorter-term debt instruments.

UST 10:2 Spread Daily

On Tuesday, the 10-year–2-year spread briefly inverted before correcting, but the curve remains narrow. However, the traditional signals mentioned by BofA are unclear in an economy that has been flooded by stimulus.

All four US contracts are in the red at the time of writing, with futures on the NASDAQ 100 lagging, while those on the Dow are 'outperforming.'

The Stoxx Europe 600 Index ended a three-day gain, today, which took the pan-European benchmark to its highest level on Tuesday. Banks and automakers underperformed after yesterday leading the rally. Conversely, energy and mining shares jumped as commodities gained once again on the lower chances of a military de-escalation between Russia and Ukraine.

Earlier in Asia, regional benchmarks, save for Japan's Nikkei 225 advanced, as prospects for a diplomatic breakthrough in Eastern Europe still looked bright. Shipbuilders, steel producers, and marine transport stocks dragged the index lower, perhaps on high oil prices. Japan is among the world's most significant oil importers.

On Tuesday, during the New York session, US stocks advanced on optimism for progress in the Russian-Ukrainian talks. The S&P 500 Index gained for a fourth straight day, closing above 4,600 for the first time since January. Energy was the only losing sector.

The tech-dominated NASDAQ 100 gained over 1.5% as shares of Apple rallied for the 11th straight day, the longest winning streak for the iPhone-maker since 2003.

The dollar fell for a second day.

Dollar Daily

Nevertheless, the greenback remained within a range that may prove to be a continuation pattern upon completing an H&S configuration.

Gold jumped both because of the weaker dollar as well as the return of risk-off sentiment.

Gold Daily

The precious metal still traded along a small H&S top.

Bitcoin climbed for a ninth straight session before reversing lower intraday.

BTC/USD Daily

If one accepts our interpretation of the neckline of the cryptocurrency's H&S top (black line) as correct, that would explain why the token is stuck for the third day on an intraday basis, having developed repeated long upper shadows. If some reader interpretations are correct (red line), the H&S would be invalidated.

Oil jumped on the increased risk of supply disruptions on additional, harsher sanctions on Russia, the world's second largest oil exporter.

Oil Daily

WTI's price rebound occurred after it neared the bottom of a symmetrical triangle, presumed bullish, after an uptrend. It would be complete with an upside breakout.

Up Ahead

Market Moves

Stocks

Currencies

Bonds

  • The yield on 10-year Treasuries declined one basis point to 2.38%
  • Germany's 10-year yield advanced three basis points to 0.66%
  • Britain's Britain's 10-year yield was little changed at 1.64%

Commodities

  • WTI crude advanced 2.2% to $106.55
  • Brent crude rose 2.1% to $112.49 a barrel
  • Spot gold rose 0.3% to $1,925.59 an ounce

Latest comments

Please can I get help from you
What was wrong with my previous comment ?
What was it?
Same game every week... Pump on hope... Dump on reality...
Pinchas, you are the best at inderstanding current market conditions. Thanks for sharing your perspective. After the bounce - 5500 SPX
Thanks, Paul, don't know about "the best," but I appreciate it.
What best
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