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As the clock approaches the Fed decision next Wednesday, the stock market is reacting negatively. Amazon shares are down more than 14% on the day, with the stock closing below its 200-week moving average for the first time since 2009.
Apple’s earnings were not as bad, but they warned about a revenue hit from China, which served as a reminder of the impact of the Covid lockdown on not only Apple, but others who rely on supply from that country.
Meanwhile, the Fed will raise rates by 50 basis points on Wednesday and has more or less signalled another 50 basis points and other tightenings through the end of the year as they try to break some of the inflationary run and get their target rate closer to the neutral rate of 2 percent to 2.5 percent.
In anticipation of this, interest rates rose today, adding to the stock market’s woes. The 30-year yield is back above 3.00 percent after falling to 2.82 percent at the week’s low. The two-year yield has also returned to near the cycle high of 2.787 percent. The 10-year yield is now 5 basis points lower than its cycle high of 2.981 percent.
Today on the forex market, the USD finished mixed, with gains against the NZD, AUD, and CAD and losses against the GBP, JPY, and EUR. Today, the USD was nearly unchanged against the CHF.
Today, the GBP was the strongest of the major currencies, as funds flowed out of riskier currencies. The New Zealand dollar, Australian dollar, and Canadian dollar were the weakest of the major currencies.
Stocks
The stock market puked into the close. The Nasdaq has dropped to its lowest level in a year; closing changes for the day, week, and month; and the old adage that stocks do not bottom on Fridays. Of course, it’s also the last trading day of the month, which could have resulted in some unusual selling flows that could reverse on Monday as we begin May.
S&P 500 -3.6 percent worst single day since June 2020. Since May 2021, this is the lowest close.
Nasdaq -4.3 percent; DJIA 2.8 percent; Russell 2000 2.9 percent; and Toronto TSX Comp -1.7 percent.
Amazon had its worst day since 2006, falling 14%.
Crude oil
- Crude oil relinquishes earlier gains and settles down $0.67 to $104.69 per barrel.
- Crude oil is trading well below the day’s high of $108 per barrel.
- WTI crude oil futures rose nearly 8% on the day, reaching session highs. Prior to the recent April high (at $109.05), those highs moved into a swing zone. This swing zone was between $107.86 and $108.14. (see red numbered circles and yellow area in the chart above). Sellers’ leaned in the last four hours has seen a steady and quick move back to the downside, wiping out the day’s gains, and the contract is settling at $104.69. This is a $0.67 decrease from the previous day.
- The market closed at $101.68 a week ago. • At the settlement price, is still up 2.96 percent on the week (up $3.01) and close. This week, the low price reached $95.25 on Monday before rallying up to the 200 hour moving average on Tuesday and finally breaking above it during yesterday’s trade (see green line in the chart above). As previously stated, today’s high price extended up to the swing area and near $108.00.
- Today/this week, the $108.00 level solidified as an upside resistance target. The 200 hour moving average at $102.23 and the rising 100 hour moving average at 101.87 will be important levels to watch on the downside in the coming trading week.
Russia
Most key customers agreed to gas payment terms, according to Russia’s Lavrov;
Moscow and Kyiv could have already achieved significant results at peace talks, but Kyiv is changing its position on orders from the US and UK;
Russia does not consider itself at war with NATO; and
Any shipment of a foreign weapon into Ukraine is a legitimate target for Russia.
Separately, Zelensky stated that peace talks were almost certainly coming to an end.
TTF prices finished the week flat, implying that those who needed to know already knew.