Selling oil is not yet time. Forecast for the week on April 4 – April 8

By | April 3, 2016

Stock index did not show uniform dynamics concluded week. The US Dow Jones and the NASDAQ added 1.37% and 2.9%, respectively. The support they received from the macro-economic statistics, which reflected that the US economy is not cause much concern. Optimism, including provoked data on business activity in the manufacturing sector – an indicator moved in the growth zone (51.8 vs. 49.5 in February). German DAX30 lost 0.8%. Hong Kong HSI rose by 1.58%, which is partly due to the activity of public funds, which have stepped up purchases. But the Japanese Nikkei lost 3.66%, with most of the movement he passed on Friday after the publication of disappointing Tankan report.

The growth leaders escaped NZD / USD and AUD / USD, ending the week with a score of 3.28% and 2.27%, respectively. Most of the week the currency used by the weakness of the dollar, and on Friday got a reason for optimism in the data on business activity in the industrial sector of China. PMI Caixin showed a stronger-than-expected growth (49.7 vs. 48.2).

On commodity markets, Brent crude oil suffered losses after comments from the Prince of Saudi Arabia. By the end of the week energy carrier fell to 38.63 dollars per barrel, losing 4.43%. Precious metals did not show unambiguous dynamics. Gold (XAU / USD) finished the week at 1,222.08, adding 0.43% to the closing of the last week. Silver (XAG / USD) has lost 0.77%.

Chart of the week:

nasdaq chart

Nasdaq chart

The economic data of the last week:

  • Monday. US February net price index PCE + 0,1%, + 1,7% vs. 0.2%, + 1.7%
  • Tuesday. The Fed chief Janet Yellen gave a hint of a more prolonged period of loose monetary policy
  • Wednesday. Germany: March, CPI + 0,8%, + 0,3% higher than the forecast of + 0.6%, + 0.2%
  • Thursday. United Kingdom:. Q4 GDP revised to increase to 2.1% against 1.9% a preliminary assessment
  • Friday. US. March, the number of new jobs created outside the agricultural sector 215 thousand vs. 206 thousand.

Forecast for the week on April 4 – April 8

Stock market

The report on the US labor market is left behind. It should be noted that the data were mixed. Despite the increase in the number of new jobs above forecasts (215 thousand v. 206 ths.) And acceleration of wage growth (+ 0.3% on a monthly basis), marked increase in the unemployment rate in March, up 5% from 4.9% previously . After the first reaction in the form of reduction, since such data do not exclude the probability of a Fed rate benchmarks turned up and the NASDAQ reached a three-month high. And it shows that they are shifting their attention to the timing of possible tightening of monetary policy in the state of the economy. The published next week Fed meeting minutes also, most likely, will not bring anything new, but the market is already laid in the prices of the fact that in the current year should not expect only 2 rate increase. Amid signs of economic stability indices may still continue to grow with the objectives at levels 17,900 and 4600.0 on the Dow Jones (YM) and NASDAQ (NQ), respectively.

Recent statistics from Japan, to put it mildly, not pleased. Tankan report data indicate that the deterioration of sentiment in the business community of the country against the backdrop of the high appreciation of the yen, which has a negative impact on export-oriented companies. It seems that entrepreneurs do not believe in the efficacy of “abenomics“. Market indicators came out below expectations. large manufacturers sentiment index in the 1st quarter. was 6, compared to the previous 12 and forecast values ​​8. Forecast of business activity also came below expectations (3 to 6). index of business activity in the manufacturing sector (PMI) remains in the recession zone (49.1 in March). The fact that the issue of increasing the sales tax set aside in the “closet” is not very optimistic. The current situation in the consumer sector leaves much to be desired, as wages do not grow, limiting the activity of the population. If you still remember that negative interest rates are putting pressure on the banking sector, the situation is very grim. At the same time the Bank of Japan is not ready to take additional stimulus through monetary policy. All this opens the way for the Japanese Nikkei (NKD) down. Of course, the current relatively low levels to sell it a bit premature. But the upward correction may give good points for short positions with target at 15540.

Commodity and raw market

Brent crude oil continues to be held within the previously established range of 38.30 – 42.50. While energy carrier lacks catalysts to break one of its borders. Of course, a key factor supporting the market perceives the upcoming April 17 at the Doha meeting of representatives of major oil producing countries. The stakes are high enough and all meeting participants understand this. Consequently, the likelihood of reaching an agreement was high enough up until the last moment. As it became known on Friday, Saudi Prince Mohammed bin Salman said that they will go to freeze only if all countries agree to this step. Earlier, officials said the kingdom’s readiness for such a step, even despite the fact that Iran, with which only recently lifted sanctions will not join the agreement.

Prince said that “if someone decides to increase production, we also do not miss the opportunities that present themselves to us“. Therefore, the agreement is now uncertain. Of course, these fears are unlikely to cause a fall below 38 dollars per barrel, but they will not be allowed to grow quotations. An additional factor of pressure and made statements to the effect that Saudi Arabia plans to reduce its dependence on oil by creating a sovereign fund of $ 2 trillion dollars.

Thus, we can say that Brent during the next working week will be held within the former range of 38.30 – 42.50. The ability to move in the area of its upper boundary energy carrier can receive data from the US Energy Information Agency, provided that they reflect the reduction of commercial stocks and a further reduction in the volume of production in the country.

Currency market

This week a decision on the monetary policy of the Reserve Bank of Australia will announce. From that, how will the regulator’s decision and the tone of the accompanying statement will be able to depend on whether the pair AUD / USD to make an attempt to test recent highs at around 0.7722. Most likely, the answer is no. The fact that the March meeting of the Reserve Bank of Australia Minutes reflected concerns about the weakness of the Chinese economy – one of the key trading partners of Australia.

In addition, the regulator called the conditions for lowering rates – inflation low. Also worth noting is that the marked slowdown in wage growth over the past 8 quarters in the country that could have a negative impact on price pressures. Most likely, the next sitting of control rate not lower. However, it may well hold verbal intervention in the framework of the accompanying statement, aimed at reducing the current rate of the Aussie. Applications Reserve Bank of Australia to the effect that the prevailing exchange rate poses a threat to the economy, may already be enough to pair AUD / USD began to decline in the area of ​​0.7490 level.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

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