Daily Market Review 24.02.2021

The Fed Promises To Continue To Support

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% lowerMeanwhile, the broader market was lower as government bond yields rise, forcing investors to assess their investments.

Weekly Market Review (Mar 15–19, 2021)

Jobs Report on Friday

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. After a steep sell-off last week, Wall Street opened higher, as a change in the retail trade frenzy to silver powered up mining stocks, and investors awaited production data later in the day.  

DAILY MARKET REVIEW

DAILY MARKET COMMENTARY – FEBRUARY 24, 2021
THE FED PROMISES TO CONTINUE TO SUPPORT

Global Commentary

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% lowerMeanwhile, 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.”

Forex Notes

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. 

Commodities Notes

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 shutin 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. 

Cryptocurrency Notes

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 cryptoassets 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. 

WEEKLY MARKET REVIEW

JOBS REPORT ON FRIDAY

MAR 15–19, 2021

Major Economic Events: Below, you will find the toptier 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 retail sales (January): expected to rise 30% YoY. Assets in play: China indices, CNH crosses 
  • US Empire mfg index (March): index to rise to 13 from 12.1. Assets in play: USD crosses 

Tuesday 

  • German ZEW index (March): economic sentiment to rise to 75 from 71.2. Assets in play: EUR crosses 
  • US retail sales (February): forecast to fall 0.6% MoM from a 5.3% rise in January. Assets in play: US indices, USD crosses 

Wednesday 

  • Eurozone CPI (February, final): prices to rise 0.9% YoY. Assets in play: EUR crosses 
  • Canada CPI (February): prices to rise 1.1% YoY. Assets in play: CAD crosses 
  • US EIA crude oil inventories (w/e 12 March): stockpiles rose by 13.7 million barrels in the preceding week. Assets in play: Brent, WTI 
  • FOMC rate decision: no change in policy expected, but given the recent focus on yields and inflation, we can expect the Fed to provide comment on these issues. Assets in play: US indices, USD crosses 

Thursday 

  • Australia‘s unemployment rate (February): expected to fall to 6.3%. Assets in play: AUD crosses 
  • BoE decision: no changes are expected, but the focus on yields and inflation will likely make an appearance hereAssets in play: GBP crosses 
  • US initial jobless claims (w/e 13 March), Philadelphia Fed index (March): claims to fall to 719K from 759K, while the Philly Fed index drops to 19 from 23. Assets in play: USD crosses 
  • Japan CPI (February): prices to fall 0.4% YoY. Assets in play: JPY crosses 

Friday 

  • BoJ rate decision: no change in policy expected. Assets in play: JPY crosses 

Market Commentary

Stock Exchanges across the world dipped at the end of the week but still posted their most substantial weekly gain in five. Simultaneously, benchmark U.S. Treasury yields climbed to 13-month highs, partly on optimism after a $1.9 trillion recovery package was signed into law. 

The S&P 500 drifted higher to end up 0.1% on the day and 2.6% for the week, its strongest weekly showing since early February. The Nasdaq underperformed as the rotation from growth to value continued. The Dow Industrials hit an intraday record high every day this week. 

The Dow had its biggest week so far this year with a 4.1% advance, and the Nasdaq posted its first positive week in four, up 3.1%. 

The pan-European STOXX lost 0.26% on Friday, and MSCI’s gauge of stocks across the globe shed 0.06%. 

Emerging market stocks lost 0.69%. Overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.64% lower, while Japan’s Nikkei rose 1.73%. 

Forex Commentary

According to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday, speculators cut their net short dollar positions in the latest week to the lowest since mid-November. 

The net short dollar position’s value fell to $22.29 billion in the period ended March 9, a minor short position since Nov. 17, compared with a net short of $27.80 billion the previous week. 

U.S. dollar positioning was derived from International Monetary Market speculators’ net contracts in the Japanese yen, euro, British pound, Swiss franc, and Canadian and Australian dollars. 

In currency markets, the dollar index rose 0.243%, with the euro down 0.27% to $1.1952. 

The Japanese yen weakened 0.49% versus the greenback at 109.04 per dollar, while Sterling was the last trading at $1.3924, down 0.47% on the day. 

Markets are likely to remain volatile in the second quarter, particularly for the dollar, which was much stronger than expected at the start of the year, said Cliff Zhao, chief strategist at China Construction Bank International. 

“The strong U.S. dollar may weigh on some liquidity conditions in the emerging markets,” he said. 

On Thursday, the Institute of International Finance urged the Fed to give guidance on its managing of higher yields to avoid even more outflows from emerging markets. 

Metals and Energy

Gold prices fell on Friday as the US dollar rose against its peers, but the precious metal managed to post weekly gains. Gold April futures fell 0.2% or $2.8 and closed at $1,719.8 an ounce, with weekly gains of 1.3%, after hitting today’s high at $1,726.1 and the low at $1,696.6. 

Oil prices saw mixed performance on Friday as the US dollar rose against its peers, ahead of the US drilling rigs count. 

OPEC projected the global oil demand to grow by about 5.9 million barrels per day to 96.3 million BPD this year. 

OPEC output fell by 647,000 BPD to 24.84 million BPD during the past month. 

Cryptocurrency Volatility

After a brief period of consolidation, Bitcoin finally breached its previous alltime high of $58 350 and moved past the $60,000 mark. Bitcoin analyst Max Keiser has predicted the next short target as $77,000.  

As for the Altcoin market, prominent cryptocurrencies like Ethereum & LTC also show remarkable recovery and approach their previous ATHs. The last alltime highs for Ethereum is $2042, and at the time of reporting, it is trading at $1893, while the previous high for LTC was $247 and is currently trading at $225. 

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