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Daily Market Commentary April 7, 2023: Mixed Results


U.S. stocks end higher, gold prices experience a slight drop, and oil prices witness modest gains. The IMF forecasts the weakest global five-year growth outlook since 1990.

Today’s Market Performance

As of the market close on April 6th, major U.S. indices recorded gains. The Dow Jones Industrial Average increased by 0.01% to 33,485.29 points, the Nasdaq Composite Index advanced 0.76% to 12,087.96 points, and the S&P 500 Index climbed 0.36% to 4,105.02 points.

Gold: COMEX June gold futures fell 0.45% to $2,026.40 per ounce.
Oil: WTI May crude oil futures rose 0.11% to $80.70 per barrel; Brent June crude oil futures gained 0.15% to $85.12 per barrel.

Macroeconomic Overview

U.S. Jobless Claims Exceed Expectations

U.S. initial jobless claims for the week surpass market expectations.

Comments: The U.S. Department of Labor’s latest data reveals that initial jobless claims for the week ending April 1st reached 228,000, exceeding the anticipated 200,000 and the previous week’s revised figure of 246,000. This marks the ninth consecutive week that claims have exceeded 200,000. Over the past three months, initial jobless claims have consistently been revised upwards. Moreover, continuing claims for the week ending March 25th totaled 1,823,000, surpassing the expected 1,700,000 and the previous week’s revised figure of 1,817,000. Given the recent series of weak macroeconomic indicators, it is likely that the U.S. economy will face increased downward pressure in the second quarter.

IMF Forecasts Weakest 5-Year Global Growth

The International Monetary Fund (IMF) projects the weakest global five-year growth outlook since 1990.

Comments: The IMF has warned that its forecast for global economic growth over the next five years is the most sluggish since 1990. The organization urges countries to avoid economic divisions stemming from geopolitical tensions and adopt measures that enhance productivity. The IMF predicts that global economic growth will average around 3% over the next five years, substantially lower than the 3.8% average observed over the past two decades, due to rising interest rates. This outlook is even more pessimistic than during the 2008 financial crisis and the 2000 dot-com bubble burst.

Market Sentiment

Data from the Federal Reserve indicates a moderate loan reduction to domestic financial institutions, signaling easing financial distress since last month. As of Wednesday, the total loans under three key programs aimed at strengthening bank liquidity amounted to $323.3 billion, down from $332.7 billion on March 29th.

Comments: The Fed’s balance sheet currently maintains a safe level of bank reserves without further contraction. This is likely to contribute to a relatively positive market sentiment.

Gold Market

Gold prices edged lower but recorded a 2% weekly gain.

Comments: The most actively traded June gold futures contract on the New York Mercantile Exchange decreased by $9.20, or nearly 0.5%, to $2,026.40 per ounce. The minor decline in gold prices during the day was mainly attributed to the strength of the U.S. dollar index. However, recent data from the World Gold Council indicates that central banks added 52 tons of gold to their reserves in February, marking the 11th consecutive month of net gold purchases, which limited the decline in gold prices.

Oil Market

Brent crude oil closed up 13 cents, or 0.2%, at $85.12 per barrel. West Texas Intermediate crude oil settled up 9 cents, or 0.1%, at $80.70 per barrel.

Comments: Oil prices rose 6% this week after OPEC+ announced production cuts. A decline in U.S. crude oil inventories exacerbated supply concerns, and the number of U.S. oil drilling rigs fell for the second consecutive week. Weaker U.S. economic data weighed on market sentiment, decreasing trading stability in the oil market. Consequently, it is unlikely that oil prices will exhibit a significant trend in the short term.

If you find this report helpful, consider following our daily market commentary series for more insights. Happy Trading!

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