Market Quick Take - April 19, 2021 Market Quick Take - April 19, 2021 Market Quick Take - April 19, 2021

Market Quick Take - April 19, 2021

Macro 6 minutes to read
Saxo Strategy Team

Summary:  Bitcoin was the headline-grabber over the weekend as the crypto space suffered significant carnage Sunday, possibly on stories of an impending US official crackdown. About half of the losses were recovered overnight in Asia. This week, earnings season cranking up into full gear will dominate market attention, while precious metals traders will watch for whether gold can hold higher after breaking resistance Friday.


What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) – US equities ended higher on Friday closing a strong week, and S&P 500 futures are holding the line this morning with the first key support level at 4,162 and then the bigger level 4,150. The plunge in cryptocurrencies over the weekend, potentially exacerbated by the rumour of a coming US Treasury crackdown on the crypto industry for money laundering, could have negative spillover effects into Nasdaq 100 futures with the 13,950 being a key support level to watch.

STOXX 50 (EU.I) - STOXX 50 futures saw strong price action on Friday touching 4,000 before retreating a bit into the close. This morning the futures are opening higher and pushing higher in sign of continued momentum in European equities which are still relatively cheap on a relative basis and economic data have lately been supporting the rally. Today’s key resistance level to watch is at 4,000.

Bitcoin (BITCOIN_XBTE:xome) and Ethereum (ETHEREUM_XBTE:xome) - Bitcoin suffered a traumatic weekend, fall more than 10k at one point on Sunday, with smaller coins falling as much or more in many cases, although about half of the damage was erased by this morning. Some point to fears of regulation as a driver, as Turkey said it would ban the use of crypto as a form of payment. And over the weekend, stories circulated that the US treasury is poised to crackdown on the crypto space for its role in money laundering.

EURUSD and AUDUSD – the USD suffered setbacks in many key pairs last week, including a reversal of the latest sell-off wave in EURUSD now that it has retraced back toward 1.2000, and a rally back through a local pivot around 0.7675 in AUDUSD. This week will be about whether the USD continues to sell-off and the market takes these pairs through last week’s high-water marks, with earnings season in focus, and RBA meeting minutes up tonight for Aussie traders and an ECB meeting on Thursday. The market failed to boost the USD last week despite very strong US data.

USDJPY and JPY crosses – the JPY traded firmer again to start the week, with USDJPY poking to a new multi-week low overnight, while EURJPY reversed sharply again and teased below 130.00, still with a “double top” chart formation scenario in place, although missing the sell-off that would confirm it.  Treasury yields bottomed out last Thursday and are likely the key indicator, together with global risk appetite, for whether the JPY can continue to mount a recovery this week.

Gold (XAUUSD) ticked higher in Asia overnight after closing above the key resistance-turned-support area at $1760-65/oz on Friday.  While the dollar trades a bit firmer U.S. Treasury yields remain soft with 10-year real yields back below –80 bp for the first time in six weeks. Partly driven by a continued rise in global corona virus cases worldwide supporting safe havens like Treasuries and gold. Continued focus on dollar and yields as well as geopolitical developments between the U.S. and Russia. Important resistance levels, using Fibonacci, at $1785 (double top) and $1818.

Crude oil futures (OILUKJUN21 & OILUSMAY21) closed above their recent ranges on Friday, but with global virus cases hitting new records, the prospect for a sustained rally at this stage seems limited. Not least considering last week's rally, apart from strong economic data from the U.S. and China, was based on assumptions for a strong recovery in global fuel demand into the second half of 2021. With the prospect of additional barrels over the coming months from OPEC+, Iran and the U.S. we see the upside potential in Brent crude limited to $70/b until vaccine rollouts significantly changes the demand dynamics.

Beware of US Treasuries: they could resume tumbling as the economic backdrop strengthens (TLT, IEF). Last week’s rally will be short lived as Treasury yields will continue to rise together with inflationary pressures. Once fully hedged against JPY, 10-year US Treasuries provide a yield of -0.21%. Only when US nominal yields will hit 2%, they will break-even with the JGBs if fully hedged against FX risk. That’s the reason why we will see strong support for US Treasuries from foreign investors only when they test the 2% pivotal level.

The correlation between US Treasuries and European sovereigns is key ahead of ECB meeting (BTP10, IS0P, IFRB). The ECB tried to keep the correlation between US Treasuries and the Bunds as close as possible to zero by increasing its bond purchases under the PEPP program. Yet, the central bank’s efforts do not seem to be able break the correlation between the two and the European bond market continues to be widely influenced by the US safe havens. Higher sovereign bond yields can be a key issue in the periphery and France.

What is going on?

Global daily Covid cases reached a record over the weekend, based on the 7-day moving average of globally compiled case counts, with India suffering the largest daily case count for the cycle at 275k on Sunday and at the center of concern among populous countries, especially as a new variant there featuring a “double mutation”.

In Russia, regime critic Alexei Navalny is in poor health as he is on a hunger strike and has insisted on choosing his own doctor. The US and other countries have warned Russia of consequences if Navalny dies. Navalny’s network of supporters is planning protests across Russia. In Czech Republic, the government will expel 18 Russian embassy employees over claims that Russia was involved in an explosion of an ammunition depot in the country in 2014.

Commitment of Traders report covering the week to April 13 found money managers turning net buyers of commodities for the first time in seven weeks. The combined net long across 24 major commodity futures contracts, however, rose by less than 1% to 2.28 million lots with buying of crude oil, natural gas, sugar and corn being somewhat offset by selling of gold, soybeans, platinum and copper. The reporting week ended before multiple technical breakouts in oil, copper and gold, continued grain market strength, and renewed demand for soft commodities saw the Bloomberg Commodity index jump the most since December to reach a near three-year high.

Danske Bank replaces CEO Vogelzang. The now former CEO of Danske Bank has landed in a Dutch money laundering investigation and as a result he is being replaced immediately with the head of risk management Carsten Egeriis.

What are we watching next?

Johnson and Johnson vaccine to return to widespread use by the end of the week? The cheaper, one-shot vaccine will be key for a more rapid global vaccine roll-out and may be instated in the US, at least, by the end of the week, according to Dr. Anthony Fauci, chief medical advisor to the US president. Part of the reason for the pause is that the rare incidences of blood clots require non-standard treatment protocols.

Earnings reports this week. While most of earnings last week beat on both revenue and earnings the reactions were more mixed due to lack of outlook from many companies continuing to induce uncertainty into this year’s earnings. This week we get 90 earnings releases among the 2,500 earnings we track during the Q1 earnings season. The names underlined below are the ones that can move general market sentiment or their specific industry cluster.

  • Monday: IBM, Coca-Cola
  • Tuesday: China Mobile, Investor, Johnson & Johnson, Philip Morris, Netflix, Intuitive Surgical, CSX, Procter & Gamble, Abbott Laboratories, Lockheed Martin
  • Wednesday: ASML, Anthem, Verizon Communications, Lam Research, NextEra Energy
  • Thursday: Ping An Insurance, Chugai Pharmaceutical, Nidec, Danaher, Union Pacific, Intel, Snap, AT&T, Blackstone Group, HCA Healthcare
  • Friday: Daimler, American Express, Honeywell International

Economic Calendar Highlights for today (times GMT)

  • 1215 – Canada Mar. Housing Starts
  • 2000 – Canada Government to release 2021 Budget
  • 0130 – China Rate Decision
  • 0130 – Australia RBA Minutes

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank (Schweiz) AG
The Circle 38
CH-8058
Zürich-Flughafen
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.