Waiting for a China rebound? How about gold?
Wall Street gains in early trading
Real estate leads S&P 500 sectors, comms srvs slips
STOXX 600 up ~0.8%
Weekly U.S. jobless claims rise modestly
Bitcoin, crude, gold up; dollar weakens
Ten-year Treasury up at 3.58%
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WAITING FOR A CHINA REBOUND? HOW ABOUT GOLD? (GMT 1325)
Though investors have put their hopes in the recovery of industrial activities in China, global concerns might make them look for a haven in precious metals instead.
Accordingto Berenberg analysts, early signs of the long-awaited China rebound indicate it "will not be particularly stellar, offering only modest growth." Thus, rather than waiting for Godot from the East, investors could turn their attention to "well supported" gold, for instance.
As the banking sector has been shaken by collapses and overall uncertainty, and global GDP is likely to slow in Q2, offsetting any potential gains from China, and gold might get a boost from a possibly more dovish Fed, Berenberg says.
"In the near term, we believe that an overweight precious metals strategy is merited due to ongoing geopolitical concerns and risks in the banking sector."
This being the case, the broker recommends gold-oriented stocks in its analysis, such as Greatland Gold GGPL.L, Endeavour Mining EDV.L and Pan African Resources PAFR.L.
While Berenberg also highlights Boliden BOL.ST, which is mostly copper-focused, as a "top-quality operator," it notes that the Swedish miner should generate 14% of its 2023 revenue from gold.
(Boleslaw Lasocki)
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WATCH THE TAPE, THE TWO-YEAR, AND NOT THE FED (0915 EDT/1115 GMT)
Yields on two-year Treasury note rose after jobless claims remained low on Thursday as tighter credit conditions have yet to show a material impact on the strong labor market.
The jump in yields suggests the market sees the Federal Reserve still hiking rates to slow growth when policymakers meet in May.
But investors should follow the markets, not the Fed for clues on when the central bank's rate hikes will end, says Richard Saperstein, chief investment officer at Treasury Partners in New York.
It may be possible that the Fed raises rates by another 25 basis points when policymakers end their meeting on May 3, as many in the market believe, Saperstein says.
But the two-year note's yield has moved below the fed funds rate, which historically signals that the Fed is near the end of its rate hiking cycle and the fed funds rate is near its peak.
Meanwhile, futures pointed to a higher open after initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 198,000for the week ended March 25, the Labor Department said on Thursday. Economists polled by Reuters had forecast 196,000 claims for the latest week.
(Herbert Lash)
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