S&P 500 positive in 2020 & GBP/USD Breakout - DAILY MARKET UPDATE

•    S&P 500 turns positive for the year, up 46% from March low
•    Oil price drops with focus on OPEC+ noncompliance
•    Gold gets its mojo back in lead up to Fed meeting
•    British pound Breakout (GBP/USD)
 

MARKETS

The relentless belief in the reopening trade on Wall Street has taken the S&P 500 index positive for the year while the British pound is breaking higher (GBP/USD) helped by dollar weakness. Oil prices however gave some recent gains.
 

GURU WISDOM

“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” - Robert G. Allen
 

S&P 500 Positive YTD

As we look ahead to the beginning of Asian Tuesday, the almost unfettered confidence across markets continues. The ‘reopening optimism’ trade continued into Monday with Wall Street powering higher once again. The S&P 500 erased its annual loss to turn positive for the year after a daily gain of 1.2%. The Dow Jones Industrial average is now up 50% from the March 23 low. Shares in Europe were a little more sluggish after German industrial production fell by the most on record. Eurozone GDP and unemployment data are released later today. 
 

GBP/USD > 1.27

The action across FX markets was mixed with respect to the US dollar as traders digested Friday’s blowout jobs report and looked forward to Wednesday’s Fed meeting. Sterling and the Aussie dollar were standout FX risers, breaking into new multi-month highs. 

The British pound is breaking out from a 2-month consolidation pattern as of this week. 1.265 had been a key hurdle and has been surpassed. The pound gains were broad-broad too, although strongest against a soft US dollar. Britain’s economic reopening looks to be on track, albeit slower than the rest of the EU. Non-essential shops are set to open on June 15 and all-important British pubs are supposed to open doors as of July 7.
 

Oil Compliance fears

Oil prices initially gained on news of the OPEC+ supply deal struck over the weekend but turned lower over fears that noncompliance could derail any future extension to the cuts. Saudi Arabian oil Minister Prince Abdulaziz bin Salman struck an absolute tone at a press conference on Monday stating “We have no room whatsoever for lack of conformity.” 

The price of gold recovered just narrowly beyond $1700 per oz in a strong rebound from Friday’s low near $1670 per oz. in a mostly technical rebound that could involve some positioning for a dovish FOMC on Wednesday.