The bullish rally in stock markets | 19 March 2021

#WTI:

Oil market celebrated President Joe Biden’s signing into law his signature $1.9 trillion Covid-19 bill. The stimulus package aims to vaccinate the country’s entire adult population before Independence Day on the 4th of July; fund states and businesses; and put money into Americans’ pockets besides finding them work. All these are positives for oil. The OPEC expects that in the second quarter the demand for oil in China will exceed the pre-crisis level, in India it will happen in the third quarter, and in the rest of the countries the pre-crisis level will be reached in early 2022. Against this background, oil has a good chance of exceeding the level of $67 per barrel.

Trading recommendation: buy 64.90 and take profit 67.00.

#DAX30:

The European Central Bank left rates unchanged at 0.00%, as expected, but did pledge to step up its pace of bond purchases to stem the rise in European bond yields and keep financial conditions steady. The ECB upped 2021 GDP to 4.0% from 3.9% in December, and forecast that growth rise above pre-pandemic levels in the middle of next year. For 2022, however, it cut its forecast to 4.1% from 4.2%. "Looking ahead, the ongoing vaccination campaigns, together with the gradual relaxation of containment measures – barring any further adverse developments related to the pandemic – underpin the expectation of a firm rebound in economic activity in the course of 2021,” Lagarde said. This is a positive signal for the German stock market!

Trading recommendation: Buy 14450 and take profit 14730.

XAUUSD:

The bond yields tied to the benchmark U.S. 10-year Treasury note spiked along with the dollar. That took the shine off most commodities, including the precious metals. The 10-year U.S. Treasury yield jumped to 13-month highs of 1.64% on bets for a faster pace of inflation as the economy is expected to stage a stronger recovery thanks to another round of stimulus. Bond yields hit pre-pandemic highs since last month on the argument that economic recovery in the coming months could overheat, leading to spiraling inflation, as the Federal Reserve insisted on keeping interest rates at near zero.

Trading recommendation: sell 1733 and take profit 1688.