This trading week ends on a high note and excellent sentiment in the
market as the U.S. banking sector presented outstanding quarter results beating
even the best expectations. Goldman Sachs, JPMorgan, Wells Fargo, Bank of America, BlackRock easily beat Wall
Street expectations both on EPS and revenues.
Most remarkable are the results of Goldman Sachs and BlackRock that bet
on financial instruments trading. Goldman Sachs EPS in first quarter hit $18.6
vs $10.1 expected. Blackrock’s quarter profit surged by 16% and assets under
management grew to a phenomenal $9 trillion, or 40% of the GDP of the United
States.
Brilliant start of the first 2021 reporting season. However, stock
indices are reluctant to the news. S&P broad market index gained just 0.6%
despite even tremendous March retail sales in the U.S. that jumped by 9.8%
after falling by 2.7% in February.
However, there is an event that may overshadow bullish sentiment in the
market. Jerome Powell surprised market by saying that the central bank will
begin to slow the pace of its bond purchases “well before” raising interest
rates. Such statement by the Federal Reserve could be shocking and frightening
for investors, but not now, amid brilliant reporting season and strong
macroeconomic data. So, it might be an explanation for the moderate reaction of
the stock market.
On Friday investors would focus on first quarter GDP of China that is
expected to jump by 19%, inflation in Eurozone and corporate report of another
U.S. banking giant Morgan Stanley that may easily beat analyst expectations
too.
The S&P 500 broad market index is set to follow the upside scenario
with the target at 4485 points. However, if it runs out of steam the index may
continue to consolidate at 4120 points.
Brent crude unexpectedly jumped to $67 per barrel. The only trigger for
such jump is crude reserves data in the United States that showed a sharp
decline in reserves by 5.8 million barrels. But this is not enough to justify
such bold price movements. Prices now are far above weekly resistance at $64.40
per Brent crude barrel.
Gold prices also broke through $1750 per ounce after yield on 10-year
U.S. Treasuries stepped back to 1.56%. Gold prices might be attractive for buy
positions as long as they are holding above $1750 per ounce.
The
Greenback weakened throughout the entire week. The EURUSD is struggling close
to the resistance level at 1.19600. At the moment sell positions with targets
at 1.18500 are looking favourable. But they should not be left over weekend.
The GBPUSD
is targeting the resistance level at 1.38200. Sell positions from this level with
targets at 1.37200 are still attractive to open on Friday.
The
USDJPY slid below the support level at 109.00 and may continue to decline to
107.60. However, is better to wait for the triggers for such downside
movements. Until then it is better to wait with opening any orders.