SIACharts Logo

Commentary >

Gold Continuous Contract (GC.F) & Crude Oil Continuous Contract (CL.F)

It’s rare to see investors take the seasonal saying “Sell in May and Go Away” quite this literally, but the last week really has been a tale of two markets. Thursday and Friday of last week saw a strong finish to April, helping US indices to record their best month since January, boosted by a positive response to generally stronger than expected results this earnings season.

Sentiment has turned much more cautious, however, and indices have dropped back after the forced sale of First Republic Bank reminded investors that the US banking crisis isn’t necessarily over and that lingering risks remain. A surprise resumption of interest rate increases after previously pausing by the Reserve Bank of Australia reminded investors that the fight against inflation isn’t over and the road ahead for the economy may be bumpier than previously hoped.

US economic news to start May has been positive with Construction Spending and ADP Payrolls coming in well above expectations. While this indicates a supportive environment for corporate earnings, it also gives the Fed scope to keep raising interest rates. At its meeting yesterday, the FOMC hiked the Fed Funds rate to 5.25% and was non-committal about its future plans for interest rates suggesting it’s waiting for more data while also confirming it remains ready to provide support if any emergencies flare up.

Fear indicators like Gold and the VIX Volatility Index have picked up in recent days. Crude Oil and other commodities have sold off on concerns a volatile global economy could impact demand for resources.

US indices have dropped back to retest their lows of last week. Whether they break down or rebound in the coming days may indicate whether we are currently in a correction, or a trend change as we move deeper into spring. Key economic reports of the coming week include US Nonfarm Payrolls and Canada Employment tomorrow, followed by the US Consumer Price Index on Wednesday.

Earnings season reaches it peak today with Apple reporting after the close. After today, results from mega cap US stocks drop off, and focus turns to a larger number of potentially less impactful results from small and medium sized US companies. The sector spotlight turns to the entertainment sector with Warner Bros Discovery reporting tomorrow, Electronic Arts on Tuesday and Walt Disney on Wednesday. Canada continues to move through the peak of its earnings season with headliners including BCE and Telus today, Magna and Enbridge tomorrow, Manulife and Nutrien on Wednesday, and Sun Life plus Canadian Tire next Thursday.

In this issue edition of Equity Leaders Weekly, we look at the prices of Gold and Crude Oil for insights into the state of investor sentiment.

Gold Continuous Contract (GC.F)

Keep up to date on the latest financial market news.

Receive a daily newsletter with stock highlights, ETF rankings, weekly market focus and others.