Equities: Investors received the news of the much awaited employment report very positively. All the major U.S. stock indices gapped up on the open and finished the day in positive territory. The SP-500 (SPY) made a new 4-day high and initiated a new short-term uptrend. The Nasdaq-100 (QQQ) and Russell-2000 (IWM) both still require more damage control but are finding support at the lower range of their weekly bullish channels. This is exactly the type of support you want to see if the bull market is to continue.
Volatility: The VIX (VXX) violated its new short-term uptrend but did manage to hold support near its 5-day low. This is fairly impressive, given the strength displayed in stocks today.
Bonds: Today’s employment numbers gave fixed income investors an extended deferral on interest rate hikes. However, sometimes “good enough is not just not good enough” as reflected in the price action of the 20+ Year Treasury ETF (TLT) which sold off and failed to retain most of its intraday gains.
Currencies: The US Dollar (UUP) had no choice but rise on the economic data in today’s employment report. However, it was very subdued and tempered by recent signs of improvement in Europe and results of the UK’s political election. The Euro Trust (FXE) closed in negative territory for its 2nd consecutive day and the Japanese Yen (FXY) remains a trendless market and best to avoid for now.
Commodities: The DB Commodity Index (DBC) and US Oil (USO) have established short-term support and may be initiating a consolidation phase since their extended rally which began in mid-March-2015. The technical outlook for Gold (GLD) continues to be bearish and there is a possibility that it could retest its double lows from March-2015 and November-2014.
Real Estate: This asset class was one of the most remarkably impressive in terms of price performance, despite the fact that the Home Construction Builders (ITB) or Dow Jones Real Estate Index (IYR) gave up most of their gains and closed near their intraday lows. It should be noted that both of these are extremely oversold and that negative momentum has been gradually decelerating.
ETF Capital Markets Performance Summary
Market Moving Events
- Economy / USA: The April-2015 Employment Situation report mixed results but non-farm payrolls increased to 223k vs. consensus @ 220k and prior revised @ 85k. More importantly, the Unemployment Rate dropped to 5.4%. One footnote that is akin to a fly in the ointment was the downward revision of March to 85k vs. initial report @ 126k.
- Economy / Germany: March-2015 was another solid month for Germany’s Merchandise Trade Balance @ E19.3bn vs. consensus @ E20.0bn and prior revision @ E20.0bn. Exports were up 1.2% monthly and 12.4% annually.
- Geopolitical / England: Results from the UK election reported Prime Minister Cameron retaining his position as the head of a majority Conservative party and government, which led to a rally in UK stocks and its sovereign currency.
- M & A: Syngenta (SYT) refused Monsanto’s (MON) buyout offer, thus causing speculatoin for a higher takeout offer.
- Economy / Germany: Industrial Production was weaker than expected in March-2015 with a monthly reading @ -0.5% vs. consensus @ 0.4% and prior revised @ 0.0%. Annually, it contracted -0.1% vs. 0.1% last year.
- Economy / UK: Britain’s Merchandise Trade for March-2015 as ST-LB -10.1bn vs. consensus @ ST-LB -9.5bn and prior revised @ ST-LB -10.8bn. Exports expanded 1.4% monthly while contracting -7.1% annually.
Best wishes for a safe and happy weekend from Hillbent…