Gold Gains Strength Again and Stocks Continue to Rise

market news summary

European stock indices ended the trading session of Monday, April 3, with mixed results, amid gains in the oil and gas sector after the OPEC + decision.

At the end of the session, the STOXX600 index fell by less than 0.1% to 457 points amid an increase in the shares of oil and gas companies by 4%. The German DAX fell by 0.31%, recording 15580 points, while the British FTSE rose by 0.54% at 7673 points. Moreover, the French CAC rose by 0.32% to 7345 points.

The S&P 500 index rose 0.4% to close above 4,100 points for the first time in 6 weeks. These rises come with the approaching first-quarter earnings season amid expectations that major banks will start submitting their reports in the coming weeks and provide details about the general health of the sector after the collapse of Silicon Valley Bank sparked fears about an approaching global banking crisis.

On the other hand, the Nasdaq Composite Index fell by 0.3%, falling from its highest level in two months, under pressure from the technology sector, which is more sensitive to higher interest rates.

Dollar index (USDX)

The US dollar index fell to 101.860 by 0.30% after the index rose strongly on Monday following the OPEC decision. This acts as a warning that the Fed will have to raise interest rates for a longer period.

Furthermore, data from the Institute of Industrial Supplies was issued, which indicated the most violent decline in 21 months since 2020. This is an indication of the contraction of the US economy, affected by the recent tightening policy of the Federal Reserve.

Pivot Point: 102.00

Spot Gold (XAUUSD)

Gold prices jumped at the settlement of trading on Monday, April 3rd, and closed above $1985 levels, supported by the decline in the dollar and US Treasury bond yields.

Gold prices also interacted with the OPEC+ decision to cut additional voluntary production until the end of 2023, as the sudden OPEC+ decision drives trade in gold to hedge against inflation.

Upon settlement, gold futures rose about 0.7%, or $14.20, to $2,000.4 an ounce, the highest settlement price since March 10.

Pivot Point: 1,975

Dow Jones Index (DJ30ft – US30)

US indices closed in divergence in the first sessions of the second quarter after the Dow Jones and S&P 500 indexes rose, supported by energy stocks, while technology stocks pressured the Nasdaq index.

Energy stocks rose after several countries in OPEC + announced unexpected production cuts that could push oil prices toward $100 a barrel.

At the same time, the prospect of rising oil costs added to inflation fears after Wall Street got the data which showed that weak manufacturing activity in March raised expectations that the Fed may soon end it’s tightening policy.

The Dow Jones index rose by 1%, or the equivalent of 327 points, to close above 33,600 points for the first time in 6 weeks.

The energy index topped the list of the sectors that rose the most in the Dow Jones after jumping by more than 4%, followed by the health sector, which increased by 2.8%.

Pivot Point: 33675

US Crude (USOUSD)

US oil rose at the largest daily pace since last April 12, when the trading session was settled on Monday, April 3, supported by the sudden OPEC + decision to cut production.

Countries in the OPEC + group, led by Russia and Saudi Arabia, announced a voluntary reduction in production from next May until the end of 2023. The group justified this decision as a precautionary measure against market fluctuations.

Upon settlement, US crude futures rose by 6.28%, or $4.75, to $80.42 a barrel, and Brent crude futures rose by $5.04, or 6.31%, to $84.03 a barrel.

Pivot Point: 80.35