Stocks and oil rebound, RBA sticks to end-services PMI release

Yesterday, the stock market recovered part of the losses suffered at the end of last week. was also able to rebound as major oil producers agreed to dip into their reserves to ease pressure on the global oil market. The RBA maintained its cash rate target at +0.1%.

Stocks and oil rebound

Yesterday, the stock market recovered part of the losses suffered at the end of last week. The main driving sectors in the United States were consumer discretionary, communication services and technology. Twitter (NYSE:) was one of the biggest winners in yesterday’s trading session as it was reported that Elon Musk had acquired around 9.2% of the company’s outstanding shares.

Shares of Twitter soared about 27%. On top of all this positivity, Chinese companies listed in the United States have made strong progress, as China’s securities watchdog has suggested revising privacy rules on offshore listings.

Such a move could help remove the legal hurdle of supervising audit cooperation. Yesterday the biggest losers in the US were utilities, real estate and healthcare. Let’s not forget that although we have seen the market rebound higher, negative pressures are still floating around due to geopolitical tensions and high inflation.

Market participants are also aware of upcoming US Federal Reserve rate hikes. The main question is no longer whether the Fed will raise rates, but how quickly and how big each increase will be. According to the CME tool FedWatch, the current expectation is to see rates in the target range between 2.50% and 2.75% by the end of this year.

Performance of the main indices.

Oil also rebounded yesterday as major oil producers agreed to dip into their reserves to ease pressure on the global oil market. As new sanctions are about to be imposed on Russia, everyone is gearing up for a full boycott of Russian fossil fuels.

As Western Europe seeks alternatives to Russian energy, Iran is slowly gaining popularity as a place to seek new energy contracts. However, since the United States still has sanctions imposed on the Middle Eastern country, Western Europe is looking for ways to convince the United States to temporarily remove these restrictions.

Talks have stalled, with the United States now seen as one of Europe’s main potential suppliers.

Brent Oil – Technical Outlook

The technical image of our 4-hour chart shows that price is currently stuck between two interim short-term trend lines, where the bullish one is taken from the February 18 low and the bearish one is taken from the high. Of March. 8. To envision the next short-term directional move, a breakout of one of these lines would be required.

If the commodity breaks through the aforementioned bearish line and breaches the 114.88 barrier, marked by the March 30 high, it could bring more buyers into play. Brent Oil could hit the 118 hurdle, 80, marked by an intraday low of March 25. If the buying doesn’t end there, the next possible target could be 120.69 or even 122.92 marked by the March high. 24.

On the downside, a break of the previously discussed bullish line could open the door to lower areas as more sellers may join in. Brent oil could then drift towards the 100.88 hurdle, a break of which could set the stage for a move towards the 97.92 level, marked by the March low.

Brent 4 hour price chart.
Brent 4 hour price chart.

On the currency front, the was the biggest loser yesterday, down sharply against its major counterparts, notably the . This was caused by talk of potential new sanctions the West is considering imposing on Russia. Given that the commodities sector rose yesterday, commodity currencies such as , and were the best performers.

Japanese data and the RBA’s tariff decision

In the early hours of the Asian morning today, Japan released its household spending figures on a monthly and annual basis. Both figures have fallen sharply. The fell from the previous -1.2% to -2.8% and the fell from +6.9% to 1.1%. This had put some pressure on , forcing it to correct slightly lower. Nevertheless, the index closed the session in positive territory.

Japan Household expenditure over one year

Japan Household expenditure over one year

But, probably, the main event of the Asian morning was the . The Board decided to maintain the cash rate target at +0.1% at the previous meeting. Although the bank notes that the global economy has recovered well from the pandemic, the new concern has become the war in Ukraine and the uncertainty surrounding it.

Although the RBA is concerned about rising inflation in various parts of the world, the Australian economy remains resilient as consumer spending has picked up in recent months. The board kept the rate at the same level as before at today’s meeting, at +0.1%.

The bank said it would like to see real evidence that inflation is kept within the 2-3% target range. The committee will continue to assess the information in the coming months as it decides on further changes in monetary policy.

AUD/CAD – Technical Outlook

climbed higher this morning, creating a higher high, breaking through the 0.9462 barrier, marked by the March high. At the same time, the pair still sits above an interim short-term bullish support line taken from the March 15th low. As long as the rate remains somewhere above this bullish line, we will continue to aim higher.

A further push north could bring the pair closer to the 0.9556 hurdle, marked by the May 2021 high, where a temporary holdup could occur. If the bulls remain in power, they could easily drag the rate towards the 0.9620 level, marked by the inner low of April 22, 2021.

Alternatively, a break below the aforementioned bullish line and a drop below the 0.9374 area, marked by the April 4th low, may signal a change in the direction of the current trend. The AUD/CAD could then drift towards the 0.9339 hurdle, or even towards the 0.9290 level, marked by the low of March 22nd.

Technical analysis of the AUD/CAD 4-hour chart.
Technical analysis of the AUD/CAD 4-hour chart.

During the European morning, the euro zone should deliver the final figure for March. The forecast is for the number to remain the same, at 54.8. Anything above 50 shows that the service sector continues to improve.

If the number comes out better than expected, it could slightly boost the EUR against some of its major peers. The UK will also release its final figure for March, which is also expected to remain the same at 61.0.

Final US data will be on the radar after that. The number is expected to increase from 56.5 to 58.9. However, the services PMI will not be the only data to come out of the United States. The country’s figure will be on the prowl as it is believed to have improved somewhat from 56.5 to 58.0.

As for the rest of today’s events

Canada will produce its February figure. The current expectation is to go from 2.62 billion to 2.90 billion.

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