Precious Metals Rise, Stocks Dip

February 27th, 2017 by

©: alexis84 / 123RF Stock Photo

©: alexis84 / 123RF Stock Photo

Equities in the U.S. and around global exchanges traded in negative territory on Monday, apparently carrying over the downward bias shown on Friday. The precious metals, meanwhile, were all higher in early trading, led by the Platinum Group Metals.

Spot gold was slightly stronger, poking 0.15% above unchanged to $1,258/oz. Silver prices hit a 4-and-½-month high of nearly $18.40/oz, up 0.25%.

Platinum and palladium each advanced over 1%, surpassing $1,035/oz and $780/oz, respectively.

Stocks Reverse Direction

Analysts who have questioned the durability and underlying logic of the quarter-long rally in stocks have grown louder during February. Even the officials who set the country’s monetary policy at the Federal Reserve have cast doubt about the so-called “Trump Rally.”

Aside from most major U.S. companies issuing fairly bullish earnings reports from Q4 2016, there hasn’t been a clear reason for the (seemingly) unending string successive all-time highs reached by the equities markets this year. This bull run has come amid virtually zero volatility: none of the three leading U.S. stock indices have moved 1% in either direction in 53 trading sessions. Moreover, after spending much of the day in the red, the Dow Jones eked out its 11th straight winning session on Friday.

bull-market

This kind of activity has unsurprisingly proven unsustainable. After losing ground on Friday, stocks were again moving lower in New York and abroad this morning. While Wall St was recovering to about 0.1% below unchanged, markets in Shanghai and Tokyo closed down 0.76% and 0.91% overnight, respectively. European shares were mixed. Traders in the U.S. took the 1.8% increase in durable goods orders announced for January as reason to bounce stocks from their lows this morning. The measure is seen as a gauge of how much businesses are investing in future output. Orders for durable goods fell 0.8% in December.

Even before the rally in stocks started showing signs of cracking, the Nasdaq repeatedly has trailed behind the Dow Jones and S&P 500. This has been due to relatively poor performance among technology stocks, which the index is heavy in. This includes electric automaker Tesla, which lost nearly 5% on Monday.

In the oil market, Brent crude and WTI crude for April delivery traded higher on Monday; the latter was above $54.20/bbl while the former traded above $56.25/bbl, although both were off their morning highs. The dollar was 0.2% lower to 100.9 on the DXY index. Markets will likely react to President Trump’s first address to Congress on Tuesday.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.