US Close: Stocks edge lower, ADP in-line, Oil pares gains as gas demand continues to fall, Gold rallies as de-escalation optimism fades, Bitcoin hovers

US stocks declined as investors watched March inflation skyrocket in Europe, while waiting for any progress towards a Russia-Ukraine ceasefire deal. Stocks are going to have trouble rallying as geopolitics and inflation risks won’t be going away anytime soon. Inflation got very hot in Europe and that is going to pressure the ECB a lot sooner in raising rates.  It seems, the Russians are continuing with military operations and that the promise to reduce the military is pointless as the attacks keep on coming.  Talks have been deemed positive, but many traders are expecting a prolonged period of time before a breakthrough in reaching a peace agreement will happen.  

ADP

The private sector hiring is doing just fine.  The March ADP employment report posted a solid 455,000 jobs, while the prior month got an upward revision to 486,000.  This number didn’t really do anything for Wall Street, but most likely affirmed some expectations that the Friday nonfarm payroll report should be strong.  What stood out was that small business was able to participate with hiring this time, which is a good sign because some analysts were fearful they were struggling to keep up with wage pressures from bigger companies.  Small businesses added 90,000, medium-sized companies created 188,000 jobs, and large firms headcount grew by 177,000.

Oil

Crude prices are comfortably above the $100 level after a full day has passed and no progress has been made in peace talks between Russia and Ukraine. It seems any troop removal might really just be Russia refitting or resupplying them before sending them back to Ukraine.  As skepticism grows over whatever progress happened the other day, energy traders could quickly erase the drop that occurred over the past week.

WTI crude pared gains after the EIA crude oil inventory report showed gasoline demand fell again and US production finally rose.  The oil market still remains very tight and stockpiles are too low.  Concerns about demand destruction are growing as the economic growth outlook is starting to look a little vulnerable.  The Association of American Railroads reported that rail traffic declined in the week ending March 26^th.  The headline 3.2% drop from a year ago was led lower by a big 19.2% drop in petroleum products. 

WTI crude should find initial resistance from the $115 level, followed by the $121.50 level.

Gold

Gold rallied as investor skepticism grew over that Russia and Ukraine were making progress towards a peace agreement.  Gold also got some support after another strong labor market reading suggesting wage pressures might remain as the labor market remains hot.  The private payroll report showed that even small businesses are able to hire people and that will ultimately raise expectations as to how many rate hikes the Fed will deliver this year. 

Gold is poised to make a strong run here as geopolitics, inflation, and growth concerns, all remain big risks to the outlook.           

Bitcoin

Bitcoin’s rally is taking a breather and that should remain the case as war concerns will completely dominate the short-term fate for most risky assets.  Bitcoin needs a catalyst to make a run towards the $50,000 level, so for now it seems like it could consolidate between the $45,000 and $48,000 levels.  

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