China posted its highest-ever recorded GDP growth of 18.3% in the first quarter, despite coming in slightly below the market-expected 18.5% print. The broad-based recovery also extended into industrial production, which climbed 14.1% year-on-year last month, while the March retail sales exceeded market forecasts by expanding 34.2% compared to the same month in 2020. Although the year-on-year comparisons are heavily skewed, considering that China was in a lockdown this time last year, it still shows the economy taking meaningful strides into the post-pandemic era.
China’s stellar economic prints, coupled with Thursday’s better-than-expected data out of the US, shows the global economic recovery is indeed gathering momentum, and such prospects appear to justify the bullish prospects for risk assets moving forward.
US stocks set to carve fresh peaks in coming week
Global investors will also be eyeing the preliminary US consumer sentiment readings for April due later today. Markets expect consumer sentiment to be at its highest since February 2020, before the Covid-19 pandemic forced lockdowns Stateside. The US consumer sentiment data would also be read amid hopes of a broad-based recovery which have been further fueled by yesterday’s economic data releases, featuring the lowest weekly jobless claims since March 2020 and the highest month-month gain for industrial production since July.
US benchmark stock indices posted new record highs on Thursday as markets cheered signs that the US economy is well and truly getting back on its feet since the pandemic. Although US equity futures now point to a breather when markets open Friday, one would be justified in thinking that new record highs remain in the offing.
Still, what’s crucial for investor sentiment is that this economic recovery doesn’t show signs of letting up. The global vaccination drive along with the supportive monetary and fiscal measures in major economies all form key components for the risk-on outlook.
Gold eases as the buck comes up for air
The dollar index (DXY) is attempting to post its first daily advance for the week, though is unlikely to be able to prevent two consecutive weekly declines for the first time since February. The greenback’s support has been eroded with 10-year Treasury yields moving below the psychologically-important 1.60% mark, which in turn allowed spot gold to break above its 50-day simple moving average (SMA) for the first time since early February.
This technical event may offer bullion bulls a whiff of optimism that could spur prices on higher, taking advantage of the fact that real yields lurched deeper into negative territory yesterday. It’s still early days before one can decisively call for a bullion recovery, although to be fair, spot prices have been posting higher highs since March.
A decisive breach of its 100-day simple moving average which currently resides the psychologically-important $1800 may just do the trick as a clarion call for gold bulls to rush back in.
Oil benchmarks take heart from economic recovery
Oil prices are set for their biggest weekly advance in six, taking advantage of the moderating dollar seen so far this month. From a technical perspective, the 50-day moving average for the active Brent futures contract has proven itself as a reliable support level in recent weeks, guiding the global benchmark higher.
While the hopeful data out of the US and China this week should support the case for further gains in oil prices, global demand has to show itself robust enough to absorb the incoming OPEC+ supplies starting next month. Otherwise, any major slippage in reining in Covid-19’s spread could then undermine oil’s recent gains.
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