Equity Markets

Risk sentiment remains fragile but investors focused on the positives on Wednesday, helping US stocks to rebound:

• The energy sector found some stability after a historic plunge which caused the price of oil futures to drop below zero.
• The Senate approved a stimulus package of $484B which will be voted by the House on Thursday.

Major US equity indices pared some of the losses seen at the start of the week led mostly by a recovery in the energy and technology sector:

• Dow Jones Average Industrial added 457 points or 1.99% to 23,476.
• S&P500 rose by 63 points or 2.3% to 2,799.
• Nasdaq Composite added 232 points or 2.8% to 8,495.

On the earnings front, AT&T first-quarter earnings stood out:

• Diluted EPS of $0.63 as reported compared to $0.56 in the year-ago quarter.
• Adjusted EPS of $0.84 ($0.89 without COVID-19 impact) compared to $0.86 in the year-ago quarter
• Cash from operations of $8.9 billion
• Capital expenditures of $5.0 billion
• Free cash flow of $3.9 billion
• Consolidated revenues of $42.8 billion

While the TV subscribers continue to take a hit, the monthly phone subscribers were among the main area of strength for the first quarter. Its share price dropped by 1.21% to $29.47.

Currency Markets

In the FX space, major currencies were mixed against the US dollar following the timid improvement in risk sentiment. However, the greenback remains buoyant and gathered momentum towards the end of the session lifted by the demand for haven assets.

The Australian dollar and the British Pound were among the best performers against the US dollar, lifted by encouraging economic data:

• UK Inflation data: The data was mixed – the official figures that jobless rate rose to 4.0% in February from the previous 3.9%. However, claimant count rose by 12.1k, far better than the 172.5k projected.
• AUS Retail Sales: Economic data was mixed yesterday. Westpac Leading Index slumped to -0.84% in March from -0.42% but preliminary Retail Sales figures lifted sentiment as it rose by 8.2% in March compared to a growth of 0.5% in February.

The AUDUSD pair reclaimed the 0.63 level on Wednesday, backed by economic releases and the fragile stability in the oil market. However, as of writing, the pair is trading in the 0.62 range.

Oil Market

The plunge in oil prices has tamed down, but the overall outlook for the oil market remains gloomy. The various forms of lockdowns have crushed demand, and a significant turnaround in the oil market will likely occur when traders anticipate a return to global activities.

In the meantime, investors are relying on the support of oil production cuts and the coordinated actions of global leaders to bring some stability to the energy industry. The storage problem will remain a matter of concern if investors foresee extended lockdowns in the following months.

The weekly EIA crude oil report shows a significant build in crude oil inventories but came in-line with expectations, which has brought some relief. As of writing, WTI and Brent Crude are currently trading in the vicinity of $7 and $19, respectively.

Gold

Despite an improvement in risk appetite, Gold rose above the $1,700 amid a softer US dollar. The narrative is quite simple, investors are on the lookout for haven assets which is driving the XAUUSD pair higher. The recent fall in the precious metal was mostly due to the rise in the greenback. The overall outlook for gold remains positive, and any downside will likely be limited.