STO世透国际：Beyond Forex - Metals, Oils, Indices, Bonds, Equities May 1st

Keep up to date with metals, oils, indices, bonds, equities and agricultural commodities in our Beyond Forex analysis. With a lot of news coming out of the United States and the UK, there have been some observable trends developing; some more beneficial than others. Also visit our economic calendar

to learn about this week’s latest and most significant economic events.

Treasuries

Friday May 5th sees the release of the US non-farm payroll figure, although with unemployment now seen as merely frictional, the more important detail is going to be in the average wage reading. Until we see meaningful growth here, the Fed is going to have a degree of wariness over pulling the trigger on that next interest rate hike as this risks choking off the consumer spending that is helping drive the economy. US bond yields have been improving, but wage growth below 0.2% could put a quick end to that.

Oil

We may have seen a bigger than expected draw in oil inventories last week, but the accompanying rally for crude prices was somewhat limited. There are two big events to watch here in terms of the next monthly Opec report on May 11th and the cartel’s meeting on May 25th, with the latter having the potential to offer clues over further production quota cuts. Oil seems to be lacking some direction for now, and until the fundamentals come to the fore – more clarity from the fundamentals seems to be needed.

Indices

The run-off vote in the French Presidential elections takes place on Sunday May 7th and although the result – a win for Macron – seems to be as good as a foregone conclusion, the euphoria for markets hasn’t been as abundant as some may have expected. Although the candidate has no aspiration to pull France out of the Euro, he is a proponent of reform and a two-speed Eurozone – something that could have the potential to limit longer-term returns in the top tier, of which France presumably intends to play a part alongside Germany.

Gold

The price of the precious metal has been retreating of late following what was broadly seen as the positive outcome of the first round of Presidential voting in France. However tensions remain high between the Washington and Pyongyang, and with Tuesday 2nd May marking the 85th anniversary of the founding of the North Korean army, this could be the proverbial flashpoint for an escalation in the situation. Gold’s drift notably below $1300 could prove short lived.

Equities

Siemens, Germany’s second largest company, reports its latest earnings numbers on Thursday 4th May. The company has been showing signs of accelerated order book building in recent months and there’s also talk that the trains division may merge with that of Canada’s Bombardier. Confirmation of either of these points could see the stock finding yet more to cheer later in the week – although with shares up 40% year on year, there’s plenty of scope for booking profits if the numbers don’t deliver.

Commodities

May marks the start of the winter season in Brazil and the big concern here is the threat of frosts hitting next year’s coffee crop. It rarely happens, but the fear factor can lead to a ramping up of coffee prices in general during the month. There’s already the expectation that coffee production from the country will fall next season, so anything that points towards further reductions in output should prompt some marked price reaction.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.