- Markets are looking for direction
- Falling Treasury yields drag on the dollar
- Gold rallies
European stocks and futures on the , , and were slightly higher ahead of the open on Wall Street on Wednesday as traders await key US inflation data and today’s corporate earnings releases in the hope they will provide some clarity on future economic growth. Markets have been struggling on worries that higher inflation driven by hikes in energy prices as well as supply chain bottlenecks will dent the current recovery.
Oil slid after its recent run-up.
Global Financial Affairs
At the time of writing, futures on the NASDAQ were outperforming followed by contracts on the Russell 2000, while contracts on the S&P 500 and Dow Jones Industrial Average were almost flat.
On , we pointed out some of the current market contradictions as stocks were trading lower on concerns that inflation will slow the recovery, but sectors that benefit from economic growth were outperforming. Yesterday, the market briefly made sense again. However, today, it seems that investors are feeling lost, as they are bidding up the opposite sides of the reflation trade—value stocks listed on the Russell 2000 and growth stocks listed on the NASDAQ.
Apple (NASDAQ:) shares extended a selloff in the premarket on a that the tech giant may have to cut iPhone 13 production due to the global chip supply shortage resulting from supply chain issues.
However, in Europe, strong earnings guidance from software giant SAP (DE:) helped push Germany’s higher. The stock advanced 5% after increasing its full-year outlook for the third time following solid quarterly , thanks to the continued trend of shifting IT operations to the cloud in a world that now embraces remote working.
German bond yields on the note reached 5-month highs ahead of US that may provide some clues on the Fed’s path to higher interest rates.
Meanwhile, yields on US Treasuries fell for the second day, back below 1.6% and the chart suggests that they will likely move even lower.
The recent risk-off pushed investors back into Treasuries, weighing on their payouts. Yesterday, yields slumped, erasing more than two days of gains and completing an exceptionally bearish Evening Star.
The decline in yields dragged the lower, reversing yesterday’s gains and then some.
Dollar Index Daily
The selloff pushed the greenback back into a bullish triangle.
USD weakness, compounding risk-off pushed higher for the second day in a row.
We continue to monitor the H&S bottom, making up the right shoulder of an even larger H&S bottom. A close above 1,780 may provide bulls with the juice to go for broke.
fell for the second day.
The cryptocurrency may be developing a short-term H&S on its intraday chart.
fell for the first time in five days but managed to remain above $80, supported by a global supply crunch.
The current trading appears to suggest tired traders after a considerable bull run. The price has been unable to overtake Monday’s high, in the form of a bearish Shooting Star, whose negative outlook is strengthened when the shooting star itself found resistance by the top of a rising channel. Momentum too has been hiccupping, as the RSI forms a H&S top. Profit taking may test the channel bottom at $78.
- On Thursday, US are published.
- are printed on Thursday.
- US figures are released on Friday.
- The was up 0.4%
- Futures on the S&P 500 were were up 0.2%
- Futures on the NASDAQ 100 rose 0.5%
- Futures on the Dow Jones Industrial Average were little change
- The Index was little changed
- The Index rose 0.4%
- The Dollar Index fell 0.1%
- The rose 0.2% to $1.1551
- The was little changed at 113.57 per dollar
- The slid 0.1% to 6.4463 per dollar
- The rose 0.2% to $1.3621
- The yield on 10-year Treasuries was little changed at 1.57%
- Germany’s 10-year yield declined two basis points to -0.10%
- Britain’s yield declined two basis points to 1.13%
- WTI crude fell 0.5%
- rose 0.3% to $1,765.20 an ounce