Stocks fell yesterday, with tech stocks declining the most amid a jump in Treasury yields and surging commodity prices. The Nasdaq tumbled with the slump in the technology-laden index pushing it beneath its 50-day moving average for the first time in about four months. The Nasdaq was trading 2.2% lower. Meanwhile, the broader market was lower as government bond yields rise, forcing investors to assess their investments in technology shares that are seeing as richly valued. The S&P 500 index was down 1% at 3,837, while the Dow Jones Industrial Average slipped 0.6% in Tuesday action at 31,341. 

Tesla was down more than 5% in trading Tuesday, falling below the price at which it entered the S&P 500 in December. Its stock has become intricately linked to bitcoin after the electric vehicle maker made a $1.5 billion investment in the digital token earlier this month. Bitcoin was falling 11% Tuesday to below $50,000. 

In testimony before the Senate Banking Committee on Tuesday, Federal Reserve Chairman Jerome Powell said the U.S. economy was “a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved.”

The dollar slipped against major currencies, sliding to a multi-year low against the British pound and the Australian dollar. Growing oil and metal prices have benefited commodity-linked currencies, with Canadian, Australian, and New Zealand dollars rising for the year. Since early February, the dollar has been falling following a January rebound from a 7% fall in 2020. Weakness in U.S. jobs threatens to threaten dollar rallying, as investors see wavering job data reinforce the Federal Reserve’s pledge to keep interest rates down.  

The pound hit a three-year top of $1.4068, aided by one of the fastest vaccine rollouts in the world. 

The Japanese yen rose by 0.35 percent relative to the greenback by 105.03 per dollar. The euro grew by 0.2 percent against the dollar to $1,2142 after data showed that German company morale improved more than anticipated in February, thanks to the country’s resilient industrial sector. 

Oil prices jumped by more than $1.00, underpinned by optimism over COVID-19 vaccine rollouts and lower output as U.S. supplies were slow to return after a deep freeze in Texas shut–in crude production last week.  

Shale oil producers in the southern United States could take at least two weeks to restart the more than 2 million barrels per day of crude output that shut down because of cold weather, as frozen pipes and power supply interruptions slow their recovery. U.S. crude rose 92 cents, or 1.5%, to $62.62 a barrel, having reached a session high of $63. 

Gold traded virtually unchanged but was holding near the highest prices in a week after important testimony from Federal Reserve Chairman Jerome Powell, which provided further guidance to a market contending with a steady rise in yields on the prospects of a sharp recovery from the COVID-19 pandemic. 

The world’s most valuable digital coin plunged 14% in 24 hours, sinking below $50,000 to trade around $46,443. It had earlier fallen as much as 16% to hit an intraday low of $45,041. Skeptics warn that bitcoin has no intrinsic value and is one of the giant market bubbles in history. Last week, analysts at JPMorgan said bitcoin was an “economic sideshow” and that crypto–assets rank as the “poorest hedge” against significant stocks declines. On Wednesday morning, bitcoin recovered to trade at $50,817. 

Smaller digital tokens like ether and XRP also tumbled. Ether slipped 17% to $1,458, while XRP sank 22% to trade around 44 cents. 

Major Economic Events: Below, you will find the top–tier economic events for this coming week.  These events can move the markets. If you want to learn more about understanding these reports and the economics calendar, take some of our fundamental analysis classes. 

Monday 

China Caixin mfg. PMI (February): expected to fall to 51.2 from 51.5. Assets in Play: China indices, CNH crosses 

Germany CPI (February, preliminary): prices to rise 1% YoY. Assets in Play: EUR crosses 

US ISM mfg. PMI (February): expected to fall to 58.3 from 58.7. Assets in Play: US indices, USD crosses 

Japan‘s unemployment rate (January): expected to rise to 3%. Assets in Play: JPY crosses 

Tuesday 

RBA rate decision: No change in policy expected. Assets in Play: AUD crosses 

German unemployment (February): rate to hold at 6%. Assets in Play: EUR crosses 

eurozone CPI (February): CPI to rise 1% YoY and core CPI to rise 1.4% YoY. Assets in Play: EUR crosses 

Canada GDP (Q4): Q3 reading +8.9%. Assets in Play: CAD crosses 

Wednesday 

Australia GDP (Q4): expected to fall 2.5% YoY. Assets in Play: AUD crosses 

China Caixin services PMI (February): forecast to fall to 51.7. Assets in Play: CNH crosses 

US ADP employment report (February): forecast to rise by 105K from 174K last month. Assets in Play: US indices, USD crosses 

US ISM non-mfg. PMI (February): index to fall to 58.2 from 58.7. Assets in Play: US indices, USD crosses 

US EIA crude oil inventories – stockpiles rose by 2.8 million barrels in the previous week. Assets in Play: Brent, WTI 

Thursday 

Japan consumer confidence (February): expected to rise to 30.8 from 29.6. Assets in Play: JPY crosses 

UK construction PMI (February): activity expected to rebound, moving to 50.8 from 49.2. Assets in Play: GBP crosses 

US initial jobless claims (w/e 27 February): claims expected to fall to 715K. Assets in Play: US indices, USD crosses. 

Friday 

US non-farm payrolls (February), trade balance (January): payrolls to rise by 115K from 49K, and the unemployment rate to hold at 6.3%. Trade deficit to fall to $66 billion. Assets in Play: US indices, USD crosses 

Canada Ivey PMI (February): previous reading 48.4. Assets in Play: CAD crosses 

The US earnings season is winding down, but with the tech stock sell-off still underway, Zoom’s results will be watched closely, while retailers like Target and Costco will provide insight into how US customers are faring. 

With full-year numbers from a range of businesses, UK corporate news comes thick and heavy. Still, housebuilders, insurers, and non-bank financial firms dominate the list, marking a change from the bank- and mining-focused updates of the previous two weeks. 

February’s employment report is a highlight of the week ahead, and it is expected to show 218,000 payrolls or four times as many jobs were created in February than in January. 

It is a busy week for data, which may help markets stabilize after a volatile end to February. March begins with China PMIs, along with the US ISM numbers, plus the ADP’s monthly job reports and then the official NFP report in the US. 

Following Jerome Powell’s testimony to Congress late on Wednesday, the dollar lost ground against other major currencies. The Federal Reserve chairman pledged to keep the central bank’s current accommodative posture until the country’s economy strengthens substantially and the labor market returns to pre-pandemic levels. By maintaining a dovish tone, Mr. Powell dismissed any near-term change of direction, with monetary policy and asset purchases set to remain unaltered even in the face of a potential spike in inflation. As things stand, dollar softness looks set to remain one of the dominant narratives in foreign exchange for the foreseeable future. 

The Australian dollar exceeded 80 US cents for the first time in three years, aided by rising commodity prices and a brighter global growth outlook. The risky currency climbed 0.5 percent to 80.06 US cents, its highest level since February 2018. In the last year, it has risen by around 21% against the US dollar. 

Gold prices fell as much as 3.4% to a low of $1,714.90 on a continuous-contract basis and traded at levels not seen since early June 2020. The metal was on course to drop 3% for the week and has lost roughly 9% so far this year.   

Gold’s been suffering at the hands of higher bond yields as well as gains for the US dollar. Yields on US government bonds have raced higher this week, making gold, which offers no yield, less attractive for investors to own. 

Oil is still in a festive mood, with the “long-only” spirit from the previous few weeks reigning supreme. WTI is now trading above $63, exactly $100 higher than the historical low of -$37, which was reached 10 months ago. 

The rally is linked to the risk on scenario and positive sentiment seen on stock markets. Of course, the expectation for a full economic recovery, and consequently an increase in oil demand, is another critical element. We should also consider inflation expectations with oil seen as an inflation hedge with investors betting on further recoveries. 

BTC has regained some ground by surpassing the $47,000 mark, following more negative developments that saw the asset drop to $44,000 yesterday. After the recent thrashing, most altcoins have come to a halt, with Cardano and Polkadot bursting by double–digit percentages. The bears remained the driving power, dragging the price lower once more. As a result, bitcoin has fallen even more in the last 24 hours, to a low of $44,200. Since February 11, this has been the lowest price. 

Regardless the bulls reacted at that point and initiated a leg up that resulted in a $4,000 increase. Bitcoin has retraced slightly as of writing these lines, but it’s still 2% up since yesterday and is above $47,000.