Spot gold fell more than 2% overnight to a one-week low, hitting an intraday high of $2,325.09 and a low of $2,390.06 before finally closing at $2,326.59. In today's Asian session, gold extended its decline, briefly falling below $2,300 to $2,294 and is currently hovering around $2,295.
Dollar killer!
Overnight, U.S. stocks, which fell sharply last week, rebounded at the start of an important earnings week and finally closed up collectively. At the close, the Dow Jones Industrial Index, Nasdaq Index, and S&P 500 Index rose 0.67%, 1.11%, and 0.87%, respectively.
The ratings of the tech giants have been downgraded, with UBS saying it has downgraded the ratings of the six major US technology stocks (Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia) from "overweight" to "neutral".
In addition, there are risks in the US bond market, with a total of $183 billion of 2-year, 5-year and 7-year bonds being auctioned this week. Judging from this week's auctions, the two-year auction may have the opportunity to challenge the winning interest rate of at least 5%. Analysts pointed out that such a high interest rate may put great pressure on the U.S. stock market.
At the moment, there seems to be a consensus on Wall Street that the pressure driving further rally in US equities will be corporate profitability, not interest rate expectations. JPMorgan Chase & Co. warned that the market's earnings expectations may be too high, and that a weaker than expected performance could lead to a further downward and deep correction in the S&P 500.
It is also worth mentioning that the strong dollar has started the "harvest" mode again, which has made the global financial market "tremble".
The Bloomberg dollar index is up more than 4% this year, and bullish dollar bets have surged to their highest level since 2019. The surge in the US dollar has had a negative impact on the currencies and economies of other countries, and Japan, South Korea, Poland and other countries have issued warnings to intervene in the foreign exchange market.
According to the empirical trading intuition, if the dollar strengthens further in the future, it may interfere with the trend of US stocks, gold and silver and other metals. However, we need to consider what kind of macro scenario will the dollar continue to strengthen in the future.
- Inflation expectations and overheating in the U.S. have risen further, while economic conditions in Europe have remained largely unchanged.
- Europe's economy is in a larger-than-expected recession, while the U.S. economy is landing moderately.
- The unexpected shock event caused a lot of chaos in the market, and funds poured into the dollar to avoid safety.
For the first possibility, even if the dollar trend is further strengthened, the basic logic of metal longs will not be fundamentally subverted, and for the second and third possibilities, there are no clues of such "unexpected events" or "unexpected data" within the scope of our eyes, and what we need to worry about is the chaos of the large asset market caused by the unexpected volatility of US stocks.
Next, let's take a look at how A-shares are performing today.
Today, the A-share market fluctuated and diverged throughout the day, with the Shanghai Composite Index adjusting and the ChiNext Index rebounding slightly. At the close, the Shanghai Composite Index fell 0.74%, the Shenzhen Component Index fell 0.61%, and the ChiNext Index rose 0.15%.
Overall, more than 3,200 stocks rose in the whole market, and northbound funds sold a net of 2.997 billion throughout the day.
There are three main reasons for the decline of A-shares.
First of all, in terms of market structure, dividend assets are bearish, coal stocks fell across the board, and the non-ferrous metals and oil sectors that supported the market in the early stage also followed the fall, and the futures market, the main contract of Shanghai tin futures plunged in a straight line in the afternoon, falling more than 8%.
Second, there was a sudden shocking piece of news coming out of the market. According to Jiemian News, it was learned from multiple sources that after the completion of the last round of financing, Yang Zhilin, the founder of Moonshot AI, has cashed out tens of millions of dollars by selling his personal shares. Subsequently, the dark side of the moon responded: The above news is untrue, and the dark side of the moon has previously announced the employee incentive plan, which can be seen in the official information.
Finally, a peripheral news that "the United States may want to attack some Chinese banks" has been circulating in major investment circles. At the moment, though, there is no official information.
Looking ahead to this trading day, it is also necessary to pay attention to the performance of the manufacturing PMI data in Europe and the United States in April, and the annualized total of seasonally adjusted new home sales in the United States in March.
In addition, investors need to pay attention to the news on the international situation.
The United States wants to sanction the Israeli army!
It has been learned that the US Government is preparing to sanction the "Yehuda Victory Camp" under the Israel Defense Forces on the grounds of violating the human rights of the Palestinian people in the West Bank. This news was unanimously opposed by different political factions in Israel on the 21st local time.
This will be the first time that the United States has imposed sanctions on the Israeli military, and some media have analyzed that US-Israeli relations may be further strained as a result.
A source said that the United States announced the sanctions as early as the 22nd, and although US officials refused to confirm which Israeli force was sanctioned, the Israeli government and media have identified it as the "Yehuda Victory Camp".
It is also worth mentioning that at a time of rising global tensions, the United States plans to fully upgrade its nuclear warheads.
According to reports, the United States will spend more than $750 billion over the next 10 years to update almost all components of its nuclear defense system. Some analysts have pointed out that this may trigger a negative chain reaction and undermine the strategic security and regional stability among major powers.
Jintou.com: Analysis of gold trend on April 23
At the moment, the divergence across the gold market remains. On the one hand, gold has risen too much, and on the other hand, the Fed's interest rate cut expectations may be greatly discounted.
At this point in time, gold is in the midst of a historic period of seasonal weakness. The last time gold fell into a historic bear market was in mid-April 2013. However, unlike in the past, when Wall Street released mostly bearish reports, now Wall Street is bullish.
As for whether to start a "big decline", it will be clear on Friday, when the US will release the core PCE price index for March, which is the Fed's favorite inflation gauge. At that point, we will see how sensitive the market is to changes in Fed rate cut expectations.
Image source: Jintou.com
From a technical point of view, as I said yesterday, if the market actively falls close to the weekly level 5 moving average, then the trend will become weaker, so the market will fall directly during the day.
The upper pressure is around 2315, and the market has been testing in this position, and there is still a chance to fall back in the short term.
If you are more aggressive, you can try to take a short position in the 2307-11 pressure area and look at 2285-2290.
Whether the support of the market at the weekly level 5 moving average can have a technical rebound, from the current point of view, it depends on the strength of the decline to be determined, and it is not excluded that the support extended to the weekly level 10 moving average, if so, the amplitude is relatively large.