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Market News 【TOP1 Morning】Gold recoups losses, Dollar dips; Oil rises as recovery optimism

【TOP1 Morning】Gold recoups losses, Dollar dips; Oil rises as recovery optimism

House passes $1.9 trillion Covid relief bill, sends it to Biden to sign, Dow rallies 460 points to close at a record as bond yields fall, House passes new stimulus.

TOPONE Markets Analyst
2021-03-11
817

早报图片.jpg

Yesterday Market Review


Gold recoups losses


House Democrats passed a $1.9 trillion coronavirus relief package on Wednesday, and President Joe Biden hopes to sign the bill Friday.


Gold erased earlier losses to hit a one-week high on Wednesday, as U.S. Treasury yields eased after subdued inflation data, with bullion gaining further support from a dip in the dollar.


The spot gold closed at $1726.34 per ounce; the volatility within the day is $1708.06-$1726.67.


The silver closed at $26.185 the volatility within the day is $25.530-$26.204.


Ten-year U.S. Treasury yields slipped after data showed U.S. consumer prices increased in February, though underlying inflation remained tepid. Gold’s status as an inflation hedge has been challenged by a firmer dollar and higher bond yields, which translate into a higher opportunity cost of holding non-yielding bullion. Prices fell to their lowest in nine-months on Monday, at $1,676.10.


Real rates have risen sharply over the last few weeks due to higher nominal rates, without a commensurate rise in inflation expectations, TD Securities wrote in a note.


“With massive Treasury issuance on the horizon, the pressure on higher rates should continue to weigh on precious metals in the near-term.” The U.S. House of Representatives paved the way for a $1.9 trillion U.S. COVID-19 relief bill to be considered on Wednesday.


Forex: Dollar dips, AUD,CAD rose

 

The dollar edged lower on Wednesday following a tame U.S. inflation report and a tepid auction of benchmark 10-year Treasury notes, while riskier currencies like the Australian and New Zealand dollars rose on improving global growth prospects.


The U.S. dollar index closed at 91.84; the volatility within the day is 91.80-92.26.


U.S. Treasury yields slid following the data, as market participants had hoped for a more upbeat outlook on consumer prices.


The dollar index has closely tracked a surge in Treasury yields this year, both because higher yields increase the currency’s appeal and as the bond rout shook investor confidence, spurring demand for safe-haven assets.


Riskier currencies including the Australian and New Zealand dollars were higher on rising prospects for the global economic recovery. The Aussie and Kiwi dollars were both up 0.27% at $0.7732 and $0.7186 respectively.


The euro was up 0.16% at $1.19195 ahead of a meeting of the European Central Bank on Thursday.


The Bank of Canada on Wednesday left its key overnight interest rate unchanged at 0.25%, as expected, and said the Canadian economy was proving to be more resilient than anticipated to the second COVID wave and containment measures.


The Canadian dollar, which has been one of the best-performing currencies versus the greenback, was 0.06% lower at $1.2629.


Oil rise


Oil prices rose on Wednesday despite a large jump in U.S. crude inventories in the aftermath of last month’s Texas winter storm. An upbeat forecast for global economic recovery supported prices.


West Texas Intermediate crude settled at $64.619, the volatility within the day is $63.084-$64.897. International benchmark Brent crude closed at $67.869, the volatility within the day is $66.270-$68.154.


U.S. crude oil stocks jumped 13.8 million barrels last week, far exceeding forecasts for a 816,000-barrel rise, as the nation’s oil industry continued to feel the effects of a winter storm mid-February that stalled refining and forced production shut-ins in Texas.


Producers appear to be coming back online faster than refiners, swelling inventories, analysts said.


“This could be a little bit of a headwind for prices because the production number is coming up faster than people thought,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.


Stocks


The Dow Jones Industrial Average soared more than 400 points to a record after falling bond yields and a new stimulus package spurred investors to snap up stocks that will benefit from a faster recovery from the pandemic.


The blue-chip Dow jumped 464.28 points, or 1.5%, to close at a record high of 32,297.02. The S&P 500 added 0.6% to 3,898.81, led by energy and financials. The Nasdaq Composite closed less than 0.1% lower at 13,068.83 after gaining as much as 1.6% earlier in the day. The tech-heavy benchmark enjoyed a 3.7% rally in the previous session for its best day since November.


Apple (AAPL-US) fell 0.91%; Facebook (FB-US) fell 0.32%; Alphabet (GOOGL-US) fell 0.20%; Amazon (AMZN-US) fell 0.17%; Microsoft (MSFT-US) fell 0.58% .


Tesla shares climbed less than 1% after an analyst at Mizuho initiated the electric car maker with a buy rating and a price target of $775 per share. That target implies an upside of 16% from Wednesday’s close of $668.06. The analyst highlighted Tesla’s market leadership in the EV space as well as its “cutting-edge” battery technology.


The GameStop story added another wild chapter on Wednesday as the retailer’s stock popped 40% before quickly falling back to earth. 


Shares of AMC Entertainment the struggling movie-theater chain jumped more than 8% on the back of stronger-than-forecast revenue for the previous quarter. AMC posted a revenue of $162.5 million, topping a Refinitiv estimate of $142.3 million.


“Today’s strength is coming from pro-cyclical stocks as investors continue to oscillate back and forth between beneficiaries of cyclical growth and those better secularly positioned,” said Chris Hussey, a managing director at Goldman Sachs.


Focus Today


20:45(GMT+8): Euro Area ECB Interest Rate Decision, Forecast: 0%, Previous: 0%;


21:30(GMT+8): Euro Area ECB Press Conference;


21:30(GMT+8): United States Continuing Jobless Claims (27/FEB), Forecast: 4220K, Previous: 4295K;

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