US stocks rallied 0.9% overnight, although they surrendered 40% of their gains into the close as investors braced for the earnings numbers from the big tech stocks, starting with Tesla (TSLA US). The Dow posted its best day in 2-weeks, making it three up days in a row, as bonds finally stabilised ahead of a barrage of US quarterly earnings data over the coming days. Precious metals fell to 2-week lows as geopolitical tensions eased with weakness likely in the sector this morning.
- The S&P500 has been getting nervous, but an almost 10% drop in the VIX “Fear Gauge” overnight suggests stocks are entering the big tech reporting week in a more orderly manner.
- Our preferred scenario is that the S&P500 pushes to new highs over the coming months, but there are plenty of potential obstacles to navigate.
MM remains cautiously bullish towards US stocks in the medium term
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Gold and silver sold off on Monday as tensions in the Middle East eased, setting off waves of profit-taking, with silver tumbling over 5% in just one session. Also, less dovish interest rate expectations are weighing on precious metals, but we believe this will ultimately reverse later this year, reinstating a powerful tailwind to the sector.
- Gold is poised to consolidate recent gains in a similar fashion to the first 6 weeks of 2024; our pullback target is $US2,275/oz, or another 3% lower.
MM is bullish on gold, targeting a test of the $US2,500 area medium term
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