Market Update – May 5 – Sentiment In the Headlines All the time

May 5, 2023

Stock markets nudged slightly higher, with sentiment stabilising somewhat after the weaker close on Wall Street. Bank jitters continue to linger, and gains were modest. EGB yields are moving higher in early trading, with the short end underperforming. Bonds rallied yesterday, despite the ECB’s rate hike and Lagarde’s insistence that it wasn’t the last. Markets are speculating on a quick reversal of rates in the US and wondering how long the ECB policy can diverge from the Fed outlook, but with Treasury yields also nudging higher this morning, the rally in bonds has been halted for now. German manufacturing orders plunged -10.7%. Chinese factory activity unexpectedly contracted in April.

The markets are still digesting various drivers ahead of the NFP today, especially the policy stances from the FOMC and ECB, along with deepening jitters over the regional banking system.

FX – USDIndex is within yesterday’s trading range, currently at 100.94, as data on productivity, labor costs, and claims suggested the Fed may not be done. Yen settled at 134.00. EURGBP dived this morning to 0.8740, while Cable broke its 1.2600 high.
Stocks – The US500 was off -0.72%, the US30 was down by -0.86% and US100 slid –0.46%. Apple found strength in India as overall sales fell for a 2nd straight quarter. #APPLE +2.49%. #Western Alliance -38.45% & +9.62% after hours. #First Horizon -33.16% & +4.47% afterhours. First Horizon shares sank after its $13.4 billion merger with Toronto’s TD Bank was called off. Western Alliance finished the day down 38% after it denied a report that it was exploring strategic options, including a potential sale. ASX and Nikkei managed gains of 0.4% and 0.1% respectively. The Hang Seng is currently up 0.5%.

Commodities – USOil rose to $69.37 as the week ends. It is 10% down for the week and UKOIL is 8.1% down.
Gold – holds gains above $2040, as the latest news for PacWest and Western Alliance and lower Chinese and German Factory orders prompted investors to turn to the yellow metal.

Biggest FX Mover @ (06:30 GMT) GBPCHF (+0.55%) breaks 50-day SMA. MAs aligned higher. MACD histogram & signal line positively configured, Stochastics is rising & RSI is at 78. ATR(H1) at 0.00128, ATR(D) at 0.00702.

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Andria Pichidi

Market Analyst

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