Recap –
US Stocks fell last week with the S&P 500 falling 3.05% - its third straight week of declines. The Dow Jones edged higher by 0.01%, while the Nasdaq dropped 5.52% by Friday’s close.
Monday’s above expectations US Retail Sales data (0.7% vs 0.4% expected) set the negative market tone. Fed officials throughout the week including Fed Chair Powell also confirmed inflation remains too high for swifter rate cuts.
Gold prices climbed on escalating tensions in the Middle East. Crude Oil fell to a three week low as US inventories recorded another rise, while Natural Gas prices inched lower after hitting a one month low earlier in the week. Palladium and Platinum prices declined to hit two week lows amid cautious metals trading.
In the earnings season, Netflix beat expectations and reported strong subscriber additions. Almost 79% of companies that have reported earnings have bettered earnings expectations.
This Week–
Markets will again be watching developments in the Middle East to see when or if Iran decides to militarily respond to the previous week’s Israeli attack. On Thursday US GDP will be released, while (inflation linked) US PCE data will be posted on Friday. The data could have an impact upon inflation expectations and may cause market volatility on stocks, gold, commodities and metals prices.
This week will see the earnings season pick up pace with major companies reporting. Tesla posted below expectations results on Tuesday. Facebook (April 24) Microsoft, Google and Amazon (April 25) will post their results. Stock prices have climbed this week as sentiment has improved.
Stocks –
DELTA AIR LINES
Delta increased last week and remained in an uptrend which began in Mid-JanuaryThe stock price came very close to hitting a 9 month high on Thursday. The company has been supported by better than expected earnings results on April 10th, with CEO Ed Bastian stating that demand for the spring and summer will likely be “healthy”.
LOCKHEED MARTIN
Lockheed Martin’s (LM) stock price jumped to a three month high, recording a rise of 1.16% by Friday’s close. The company in the defence sector, operates in a time of rising global security threats. Conflicts in Ukraine, the Middle East and US China tensions have led governments to place LM orders for weaponry and aircraft. So far this year LM has received $4.3 bln in contracts. Traders expect strong quarterly results this month.
Commodities -
Crude Oil
Crude Oil’s price declined by 3.4% and hit a three month low on Thursday. Oil traders have been disappointed by four consecutive weeks of rising US inventories. Risk off sentiment has also pressured oil prices, as traders have moved towards safe havens such as gold or the dollar. In geopolitics, although tensions in the Middle East have risen, oil supplies have not yet been seriously endangered.
Gold
Gold prices rose to record a one week high and finished the week gaining 1.1%. The Israeli attack upon Iran last week saw gold prices increase, but the limited nature of Israel’s military response did not trigger a fresh all-time high. A firm dollar and further statements from Fed officials about high US inflation meant that the precious metal’s upside was limited.
COCOA
Cocoa prices hit an all-time high on Friday and by close of business the commodity was up by 11.3%. Cocoa’s value has jumped by around 170% so far this year due to global shortages. The poor harvest in West Africa has made the shortfall worse according to the European Cocoa Association. Recent flooding in Nigeria, an important Cocoa exporter, made supply problems worse, underpinning higher prices.
GBP/USD
The GBP/USD declined to hit a five-month low as the dollar continued to rise against its peers. In the UK CPI inflation data was slightly higher than expected (3.2% vs 3.1% exp) but the figures did not dampen expectations that the Bank of England may cut interest rates in June. Deputy Bank of England governor Ramsden reaffirmed the position on Friday stating that inflation pressures were going down.