Market sentiment was mostly upbeat this past week with some exceptions. On Wall Street[1], the Dow Jones, S&P 500[2] and tech-heavy Nasdaq[3] Composite closed +1.36%, +1.57% and -0.58% respectively. In Europe, the DAX 30[4] and FTSE 100[5] rose 0.88% and 0.77% respectively. Meanwhile in the Asia-Pacific region, the Nikkei 225[6] and Hang Seng weakened over 2%.
Still, there were some bumps along the way as the haven-linked US Dollar[7] appreciated. Chinese equities flirted with correction territory. Meanwhile, solid demand for Treasuries at government auctions this past week stabilized longer-term rates. The 10-year yield fell after 7 consecutive weeks of gains. Albeit, it recovered a good chunk of losses into the weekend.
A stronger Dollar and weaker bond yields likely resulted in a fairly quiet week for precious metals as gold[8] consolidated. Crude oil prices[9] also saw sideways price action. A blockage at Suez Canal fueled supply disruption woes. Simultaneously, a reintroduction of lockdowns in parts of Europe to tame rising Covid cases dented the outlook for fuel demand.
Having said that, on Monday England is expected to end stay-at-home orders and could offer some lift to market sentiment. Meanwhile, the Federal Reserve is not anticipated to extend emergency SLR exemptions, opening the door to less demand for Treasuries. That may in-turn offer yields some upside momentum.
Another key event to watch out for is the US non-farm payrolls report on Friday. A solid month could lift bond yields and further boost the rotation trade out of growth and into value stocks. Most trading exchanges will however be closed for the Good Friday holiday, opening the door to illiquid market conditions. Crude oil prices
