More Nasdaq record highs
The equity rebound has been led by the tech sector which means the tech-laden Nasdaq has outperformed. The downtrodden software sector has done the heavy lifting this week with US software rebounding near 7%, and companies like Oracle rallying 18%. The earnings season is likely a big reason along with more positive risk sentiment. The US is expected to deliver another impressive quarter of results. Consensus looks for 12% earnings growth in Q1 for the S&P 500 as a whole, with an impressive 9% coming from the top line. Tech is the standout as it is expected to print close to an astounding 40% earnings growth. With valuations slightly discounted after the recent slide, equities have been cheap and are being snapped up in an 11-day win streak. The record high was just above 26,000 with the 100-day SMA below at 25,050 so round numbers are bull targets in blue sky.Â
Gold bounce in play
Bullion remains supported amid renewed optimism around Middle East de‑escalation. The pullback in oil prices is easing some of the inflation concerns that weighed on prices earlier in the conflict and had seen possible Fed policy tightening come into play. The move reflects a broader shift in market focus. While gold initially fell sharply as liquidity pressures forced selling, losses have since partially recovered as growth concerns have re‑emerged and price swings have become less extreme. A prolonged ceasefire could see more dollar selling which makes gold more attractive to foreign buyers. Recent pullbacks suggest underlying demand remains resilient and central bank buying has also resumed to underpin prices. The 50-day SMA sits at $4,896 with the big $5,000 round number above.
AUD to fresh highs
There seems to be a sense of urgency among RBA officials who have repeatedly expressed concern about losing control of inflation expectations and have openly pointed to the need for more rate hikes. Markets are pricing around 15bps for the May meeting, but that could turn more hawkish if CPI data released at the end of the month continues higher to the 4.5% area. Today’s jobs data printed in line and bolstered the resilient economy theme. That should mean AUD/USD retains solid upside potential, aside from war re‑escalation risks. The aussie is benefitting from both stronger export prices and improved risk sentiment, and this can continue. The March top is at 0.7187, just above the January 2023 highs at 0.7157. A major long-term Fib level of the 2021 high to 2025 low sits at 0.7203 so this area of strong initial resistance. Above here are May 2022 highs around 0.7282.Â