Lo que necesita saber el jueves 1 de abril:
El dólar termina marzo con ganancias sustanciales frente a la mayoría de los principales rivales, y cerca de nuevos máximos anuales frente al EUR y al JPY. Los rendimientos registraron un descenso diario, pero terminaron el mes cerca de máximos de varios meses. Los rendimientos del pagaré a 10 años se ubicaron por encima del 1.70%.
La libra subió el miércoles, ya que el Producto Interno Bruto del Reino Unido se revisó al alza del 1% al 1.3%. Además, la Inversión Empresarial Total en el mismo trimestre registró un 5.9%, mucho mejor que el 1.3% estimado anteriormente.
El oro también avanzó, alcanzando un máximo del día en 1.715$ y terminando en 1.706,00$ la onza troy. Los precios del crudo cayeron y el WTI cerró el día en torno a 59.20$ el barril.
Wall Street cerró en verde, con el Nasdaq fuertemente al alza, pero el Dow y el S&P registraron ganancias modestas.
Coronavirus: el presidente francés, Emmanuel Macron, anunció un cierre nacional durante al menos un mes a partir del sábado, ya que el sistema de salud está en problemas mientras que el número de nuevos contagios sigue aumentando. Brasil detectó una nueva variante, similar a la sudafricana, mientras que Pfizer anunció que su vacuna es 100% efectiva en adolescentes, luego de completar la fase tres de ensayos en niños de 12 a 15 años.
US President Joe Biden introduced a $2 trillion package that will form the first part of a likely $4 trillion infrastructure plan on Wednesday.
The bill features substantial investments in transportation, broadband, and care workers.
The massive package is a measure aimed at overhauling the US economy, strengthening its competitiveness abroad, and leveling the playing field for the American middle class.
Biden said that the jobs plan will boost us edge in chips, biotech, energy and will drive down price for internet service.
He said that it is time to rebuild the economy from the bottom up, middle out.
He explained that the jobs plan will make the US more competitive around world.
There will be no Federal tax increase to anyone making below $400k.
”No one should complain about a 28% corporate tax rate”.
“Now it’s time to rebuild,” Biden said during his announcement, adding: “Wall Street didn’t build this country. You, the great middle class, built this country, and unions built the middle class.”
There was no reaction in the markets which have already priced in reflation expectations.
- The S&P 500 hit fresh intra-day highs just shy of the 4000 before pulling back to close in the 3970s.
- Quarter-end flows, strong data and anticipation ahead of Biden’s infrastructure announcement have all been cited as positives.
The various banks/institutions calling for a cascade of quarter-end selling in US equity markets were left red in the face by Wednesday’s price action. The S&P 500 hit fresh intra-day all-time highs in the mid-3990s, before dropping back to close at 3973, which still amounted to gains of about 0.4% on the day. The Nasdaq 100 was the outperformer of the major US indices, gaining 1.5% amid subdued pre-US President Joe Biden infrastructure announcement conditions. The Dow dropped 0.3% and the Russell 2K gained 1.1%. The VIX saw a modest 0.21 vol drop to 19.40.
In terms of the GICS sectors; energy and financials underperformed with both losing 0.9% on the session. The former was dragged lower by a sharp drop in crude oil prices in the final hours of the US session (WTI is now trading under $59.50, down nearly 2.0% on the session), while the latter continues to reflect some regulatory concerns in wake of the Archegos Capital Management debacle. The information technology sector was the best performer (hence outperformance in the Nasdaq 100), gaining 1.5%, with Apple gaining after being upgraded by UBS and with strength in Microsoft after to company secured a $22B contract with the US army.
On the month, the S&P 500 gained 4.25%, the Dow gained 6.63% and the Nasdaq Composite gained 0.4%. On the quarter, that means the S&P 500 closed 5.78% higher, the Dow added 7.77% and the Nasdaq Composite index gained 2.78%.
Driving the day
Rather than selling, month/quarter-end buying was the name of the game on Wednesday. But there were other positive factors for equity investors to latch onto. Firstly, US data was for the most part positive; the latest monthly employment change estimate from ADP points to a solid NFP number this Friday and the Chicago PMI survey (also for the month of March) points to a strong ISM manufacturing PMI survey on Thursday. Admittedly, February Pending Homes Sales data was pretty bad, but housing data has generally been very strong as of late, so one poor print is not too much of a concern.
Elsewhere, traders also cited anticipation of Biden’s infrastructure announcement. The President is currently speaking and is, as expected, unveiling the $2.25T American “jobs” plan, which is part one of a two part transformative investment in the nation’s infrastructure (part two is going to be unveiled next month and is called the American “families” plan). The news that France has gone back into a strict nationwide lockdown did not appear to dent sentiment at all.
- NZD/USD is moving into the Asian session around about flat, pivoting on the 0.70 level.
- All eyes are on US President Biden’s speech that will begin shortly.
NZD/USD is currently trading at 0.6982 and ending at the closing bell on Wall Street flat for the day having travelled between a range of 0.6963 and 0.7025 thus far.
As the quarter draws to a close, the focus in markets is with US President Biden’s USD 2.25trn infrastructure spending plan and US job creation with the Nonfarm Payrolls in focus for the end of the week.
US equities have seen the S&P 500 move within a few points away from the 4000 level which marks a new record high for the benchmark.
Meanwhile, the reflation playbook will look for a boost from this week’s jobs data.
On Wednesday, there was a slight miss on the ADP report that showed 517k jobs added in the US for the month of March.
While this missed the market expectations of a 550k rise, compared to that of February’s report, where jobs only managed a 176k gain, it is a sign that the US economy could be turning a corner.
”The report suggests we should see a pretty strong rise in March non-farm payrolls this week,” analysts at ANZ Bank have argued.
There are high expectations for the jobs report this week as many states reopen or scale back lockdown measures. Some economists are expecting it to be the strongest monthly job growth since August.
With that being said, of the higher end of predictions, at +800k growth, that would still leave the total number of nonfarm payrolls more than 8.6m beneath its pre-Covid-19 pandemic peak.
Domestically, there is little new to note from New Zealand.
”We like the NZ story but it is no longer exceptional, and recovery beckons elsewhere, and that will potentially make NZD/USD gains harder to come by in future,” analysts at ANZ bank wrote on Thursday.
What you need to know on Thursday, April 1:
The dollar ends March with substantial gains against most major rivals, and near fresh yearly highs against the EUR and the JPY. Yields ticked lower on a daily basis but finish the month near multi-month highs. The yields on the 10-y note settled above 1.70%.
The pound gained on Wednesday, as the UK Gross Domestic Product was upwardly revised from 1% to 1.3%. Additionally, Total Business Investment in the same quarter printed at 5.9%, much better than the 1.3% previously estimated.
Gold also advanced, peaking for the day at 1,715 and finishing at $ 1,706.00 a troy ounce. Crude oil prices fell, with WTI ending the day around $ 59.20 a barrel.
Wall Street closed in the green, with the Nasdaq sharply up, but the Dow and the S&P posting modest gains.
Coronavirus: French President Emmanuel Macron announced a nationwide lockdown for at least one month starting on Saturday, as the health system is distressed while the number of new contagions remains on the rise. Brazil detected a new variant, similar to the South African one, while Pfizer announced its vaccine is 100% effective in teenagers, after completing phase three trials on children aged 12-15
XRP price poised for 42% breakout as whales go into a buying frenzy
- Silver has been on the front foot since the start of US trade, rising from $24.00 to $24.40s.
- Market focus is now turning to remarks from President Biden after the US cash close, with focus on infrastructure spending.
Spot silver prices (XAG/USD) have recovered in recent trade, rallying back from around the $24.00 level to the $24.40s over the past few hours, with most of the gains coming in the first half of US trading hours. Heading into the US close, spot silver is trading with healthy gains of 1.6% or just under 40 cents on the day.
Driving the day
USD bulls appear to have run out of steam following what has been a very strong month (the DXY is set for its best monthly gains since July 2019 of 2.4%). Surpassing the 93.50 mark appears to have been one key psychological hurdle too much, with traders instead opting to book some profits in lieu of the month and quarter-end. Weakness in the buck on the final trading day of the month has given dollar-denominated precious metals some much-needed respite. Mixed US data (strong ADP and Chicago PMI numbers but a weak Pending Home Sales print) have not had a lasting impact on precious metals markets.
Looking ahead, US President Joe Biden is expected to unveil more details on his administration’s infrastructure spending plans; he is expected to announce a $2.25T package, part one of two infrastructure bills his administration will seek to push through Congress this year. Particular attention will be focused on how he intends to pay for the spending; a corporation tax hike to 28% and higher taxes on capital gains and higher earners are all on the table, though a wealth tax is reportedly not. Traders ought to watch the reaction in US government bond and FX markets to gauge the precious metal reaction; any strength in USD and yields would be a negative for silver.
US Data Recap
A solid estimate of the number of jobs added to the US economy in March from ADP and a blowout Chicago PMI survey for the same month were unable to lift USD sentiment. Starting with the former; the payroll firm’s data indicated that 517K jobs were gained on the month, a little below expectations for ADP’s data to show 550K in job gains. Needless to say, however, more than half a million in job gains is pretty impressive. If the official labour market report on Friday confirms half a million in job gains, that would put total non-farm employment at roughly 143.5M, more than 13.5M above last April’s 130Mish lows, but still substantially below pre-pandemic levels of roughly 152.5M in total employment in the country.
Note that while ADP has not been particularly accurate in predicting the official NFP number over the past few months, it has helped to indicate the trend; i.e. ADP accurately predicted the stagnation in the rate at which jobs have been gained in the US into the end of 2020 and start of 2021, and may now be pointing towards the expected pick up in employment over the coming weeks. Wednesday’s ADP data should instill confidence in the market’s consensus prediction for 650K jobs to have been added to the US economy in March.
Turning now to Chicago PMI; the headline index surged to 66.3 from 59.5 in February, well above expectations for a rise to 60.7. The strong data comes in wake of a string of other strong manufacturing surveys for the month of March, be that the regional Fed surveys or last week’s preliminary Markit PMI report and adds further upside risk to the market’s expectations that Thursday’s headline ISM Manufacturing PMI will come in at 61.3. Despite not showing any positive reaction to the above, the dollar did show some minor signs of weakness in wake of a significantly worse than expected February Pending Home Sales release; pending sales tanked 10.6% on the month, much larger than the expected drop of 2.6%.