Turns out it was an April's Fool – North American Session Market Wrap for April 2

Log in to today's North American session Market wrap for April 2

The April Fool's joke is officially over for markets, and if anything is certain, it is the bitter taste of confusion across today's Market action.

This week’s nascent hopes for a diplomatic breakthrough in the Middle East vanished after yesterday's President Trump's speech.

Following a White House address from President Trump that completely reversed his recent softer tone, Markets repriced the reality of the US-Iran conflict as the five-week deadline is now delusional.

Oil markets are saying that hopes for peace were nothing more than a cruel fakeout, but Stock Markets are somewhat still believing in the narrative.

WTI Crude exploded by 14% overnight, flashing up to $114 before settling back above the $110 mark, an unrealistic pricing for a full on rebound investors simply cannot build a sustained case for improving sentiment.

Nevertheless, it seems that bulls are now assuming that things can't get much worse from here after ~10% corrections across all major US Benchmarks.

US equities did face a chaotic morning: Stocks gapped significantly lower at the open as algorithms and traders scrambled to dump risk from the run in Energy commodities. However, the selling pressure eventually exhausted itself as the session went on.

The reasoning is confusing, but could come from different factors: Frantic short-covering ahead of tomorrow’s critical Non-Farm Payrolls (NFP) and the long Easter weekend helped major benchmarks claw back their losses, finishing the session mostly unchanged, particularly with less Participants trading with the Holiday period.

Precious metals are saying a different story – Silver remains the ultimate barometer for market mood right now, though buyers couldn't withhold the pressure in WTI as deleveraging continues in the volatile commodity Market.

But it's not like it was only about a safe-haven dump, with bonds catching a strong bid.

Yields are dropping as persistently elevated oil prices could now start to fuel fears that energy costs will drag the global economy into a deeper recession. This is being compounded by underlying credit stress (like the Blue Owl run situation) that is slowly creeping back onto the radar.

The next 5 days will be tricky for Traders, with NFP coming up at the same time as Good Friday, and not even mentioning Easter Monday that should once again see low Market participation across the globe.

Read More:

• Crude Oil (WTI & Brent) keeps playing tricks on Markets 32 days into the Iran War
• Dow Jones & US Stock Market NFP levels: Wall Street scrambles for impossible certainty after the April Fool's fakeout
• NFP Preview: Can the labor market withstand the "Stagflation" Storm? Implications for the DXY & Dow Jones

The heatmap of today's action is quite fractured despite an improvement as the session went on.

It seems that buyers are targeting individual oversold region in a pre long-weekend rebalancing, profiting to the Tech Sector at the cost of Producer Manufacturing (which outperformed yesterday).

Sectoral analysis has been very chaotic as of late, so focusing either on Indexes or individual Stocks could help for decision-making.

After all, an Oil rise wasn't going to be so lenient on global assets, with most tumbling and particularly in those which have been more volatile in recent days, including Metals and Cryptocurrencies.

The US Dollar continued its typical positive correlation to rises in WTI, but what was more surprising was the daily rebound in Bonds which also soothed Stock Markets as the session went on.

As usual since beginning March, a bullish session for Oil quickly correlated with a rebound in the US Dollar and the Canadian Dollar, albeit on a lower extent.

On the other side of the performance spectrum, the classical losers from higher Oil prices including European currencies and the Japanese Yen.

Apart from the PMI release in China (Chinese data hasn't moved Markets much in recent days), the only key release, a huge one too, will be the Non-Farm Payrolls release, which has the potential to create a huge spike but see low continuation as the traders that are left will be going early on a long-weekend.

As always, keep a close eye on sentiment and Middle East news.

Safe Trades, Happy Good Friday, Easter and Passover for those who celebrate!

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