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Market Commentary

While markets remain relatively subdued ahead of tomorrow’s nonfarm payrolls report, after several days of losses in US stocks, which have taken “sell in May” to heart and pushed the S&P500 to three week lows, overnight markets ignored the latest weak data out of China where the Caixin Services PMI was the latest indicator to disappoint (dropping from 52.2 to 51.8), and instead focused on crude, which rebounded from yesterday’s post inventory-build lows and briefly printed above $45/bbl over uncertainty related to the impact of Canada wildfires on production and how long will last. The bounce in WTI has meant Brent briefly traded at parity with West Texas for the first time in 6 weeks.

Emboldened by the rise in oil, European stocks rose for the first time in a week as commodity, energy producers lead the rebound from the biggest four-day drop since February, while S&P500 futures rose 0.3%, and was back over 2,050.

Turkish equities and bonds continued to fall amid a political showdown between the president and prime minister.  Turkey’s 10-year bond yields climbed to a one-month high, while the Borsa Istanbul 100 Index dropped 1.6 percent, declining for a fifth day.

The lira gained 1.4 percent after the steepest selloff in eight years yesterday.

Despite the attempt at a rally, sentiment was mixed:”The market has been in a consolidation phase as its previous rally, which was based on a rebound in commodity prices and signs of economic stabilization, is starting to taper off,” Audrey Goh, a strategist at Standard Chartered, told Bloomberg. “We are also going into the summer months, when the market tends to be weaker.”

Market Wrap now:

  • S&P 500 futures up 0.3% to 2052
  • Stoxx 600 up 0.3% to 333
  • FTSE 100 up 0.2% to 6127
  • DAX up 0.3% to 9862
  • German 10Yr yield up 1bp to 0.22%
  • Italian 10Yr yield up 1bp to 1.52%
  • Spanish 10Yr yield up less than 1bp to 1.61%
  • S&P GSCI Index up 1.3% to 352.2
    MSCI Asia Pacific down 0.2% to 128
  • Nikkei 225 closed
  • Hang Seng down 0.2% to 20485
  • Shanghai Composite up 0.2% to 2998
  • S&P/ASX 200 up 0.2% to 5279
  • US 10-yr yield up 2bps to 1.8%
  • Dollar Index up 0.17% to 93.34
  • WTI Crude futures up 2.9% to $45.07
  • Brent Futures up 2.4% to $45.70
  • Gold spot down less than 0.1% to $1,279
  • Silver spot up 0.3% to $17.42

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