Metals are lower again this morning, on the first trading day of the month. Gold is testing the $1,280 level for support, while silver has fallen below $19.00 an ounce. Platinum was hit shortly after the New York open, and has bounced twice off the $1,404 level. Palladium is seeing support on supply concerns out of Russia, and is up slightly.
Markets are very thin today, with many large exchanges closed for May Day (aka International Communism Day). France, Germany, Italy, Shanghai, India, Mexico and Chile’s markets are closed for the holiday. Note that Shanghai will also be closed tomorrow, meaning that the largest physical gold market will be offline until Monday. The weakness this morning in precious metals should not be a surprise, considering this.
Russia is holding their first May Day parade in Red Square since the collapse of the Soviet Union way back in 1991. The festivities are, in part, also a celebration of Putin’s takeover of the Crimea, and its absorption back into Mother Russia.
If you’re one of those trying to figure out how the stock market closed up yesterday after first quarter GDP was 1/10 of what the market expected, you aren’t alone. Another bit of bad news that seems to be being ignored is the report that first-time jobless claims rose to a 9-week high, to 344,000 people being fired last week, That’s a 14,000 increase from the previous week, while analysts were expecting a 10,000 drop.
This seems to have been overridden by the news that personal income for March rose 0.5%, a touch over the 0.4% expected. Consumer spending was much larger than expected, increasing 0.9%, much of it on new cars. Analysts had expected an increase of 0.6%. The Markit manufacturing PMI for April came in at 55.4, compared to 55.5 for March. While slightly below expectations of 55.8, it shows steady growth in manufacturing.
The dollar is struggling, as the euro rose to a 3-week high, and the pound sterling rose to a four-year high. The DXY dollar index recovered slightly, back above 79.50 in morning trading in New York.
Things are getting ugly in Ukraine, but the market seems to have decided it’s going to end up with the industrial heartland of eastern Ukraine rejoining Russia. Markets aren’t really paying attention any more. A police checkpoint in the region was attacked with gunfire by separatists, and more government buildings were seized. At least 10 cities are partially or totally under rebel control. In the city of Slovyansk, the self-appointed pro-Russian mayor is negotiating with the government in Kiev for the release of some of his comrades. Pro-Russian militia in the city are holding 50 hostages, including eight international observers, and want to arrange a swap.
Markets are extremely volatile today due to thin volume, both in equities and commodities. Small orders are having out-sized influence on prices, so activity today should be taken with a grain of salt.
The big report comes out tomorrow, when U.S. non-farm payrolls are released. This is always a market mover.