COMMODITIES: Corrective Cycle in Gold Remains in Play
A downtrend in WTI futures remains intact and recent gains are considered corrective. Key resistance to watch is $63.46, the 50-day EMA. It has recently been pierced, a clear break of it would highlight a stronger reversal. This would open $66.41, the Apr 4 high. For bears a reversal lower would refocus attention on $54.67, the Apr 9 low and bear trigger. Clearance of this support would confirm a resumption of the downtrend. A corrective cycle in Gold remains in play and the metal has traded lower this week. A key support at $3202.0, the May 1 low has been breached. The break of this level signals scope for a deeper retracement, towards $3085.0, 76.4% of the Apr 7 - Apr 22 upleg. Note that the 50-day EMA at $3168.0, has been breached, strengthening a bearish threat. Initial resistance is $3265.4, the 20-day EMA.
- WTI Crude down $0.08 or -0.13% at $61.54
- Natural Gas down $0.02 or -0.48% at $3.346
- Gold spot down $33.47 or -1.03% at $3205.61
- Copper down $6.35 or -1.36% at $462
- Silver down $0.4 or -1.22% at $32.2378
- Platinum down $5.54 or -0.56% at $988.63
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US-CHINA: BBG-China Open To Talks If Trump 'Shows Respect' & 'Consistency'
(MNI) London - Bloomberg reports that according to Chinese officials, China is open to talks on trade if US President Donald Trump "shows respect" and names a point person for negotiations. Wire headlines claim "China wants Trump to rein in cabinet members, show consistency". Says that talks with the US should address concerns on sanctions and other issues. These headlines chime with other comments from the Chinese gov't that have said Beijing is seeking to address trade issues with Washington, D.C., in a constructive manner.
- The two sides may now be engaged in a standoff, waiting for the other to make the first call. On 11 Apr, CNN reported, "Two senior White House officials tell CNN that the US will not reach out to China first. Trump has told his team that China must be the first to make the move, as the White House believes it is Beijing that has chosen to retaliate and further escalate the trade war."
- BNN Bloomberg wrote on 15 Apr, "China will only engage in talks with the U.S. if its leaders show respect toward Beijing, according to a former top Chinese economic official. “If the U.S. wants China to totally accept the U.S. proposal, to accept the U.S. conditionality, I think there’s no negotiation,” Zhu Guangyao, who was China’s Vice Minister of Finance from 2010 to 2018, said in an interview in Singapore."
EQUITIES: Equity Option Expiry Thursday
Equity Options Expiries are Tomorrow (Thursday), because Markets are closed for Easter Friday. In Notional terms:
US:
- SPX; $1.42T vs $1.37T Monday.
- NDX: $48.08bn vs $43.13bn.
- Amazon: $17.05bn vs $14.18bn.
- Apple: $20.12bn vs $16.24bn.
EU:
- SX5E: €137.90bn vs €134.84bn.
- SX7E: €11.46bn vs €11.29bn.
- DAX: €31.30bn vs €30.06bn.
- FTSE: £11.14bn vs £11.07bn.
CROSS ASSET: Equities Off Lows As China Outlines Requirements For Trade Talks
Equities rally, bonds sell off and oil firms as BBG sources note that “China wants to see a number of steps from President Donald Trump’s administration before it will agree to trade talks, including showing more respect by reining in disparaging remarks by members of his cabinet”,
- The piece also notes that “other conditions include a more consistent U.S. position” and suggests that they want to conduct negotiations with a “point person” (akin to what was seen in Trump’s first term).
- A second round rally in equities then kicks in, with markets focused on the potential avenues to trade talks, despite some hurdles remaining.
