- Wall Street futures rise significantly.
- Inflation data for April in the US is coming.
- The dollar loses strength, bond yields fall and oil rises.
- Volatility remains the norm in stock markets.
Equity markets in Europe and Wall Street futures are in the green, extending the rally. The days marked by turbulence continue, which seem to be still there. Expectation for US inflation data.
A lasting breath?
The dow jones fell for the fourth consecutive day on Tuesday, although the S&P 500 and the Nasdaq managed to close in the positive, in another day marked by strong movements in both directions. Futures on Wednesday show gains of 1.10% for the S&P 500, 0.88% for the Dow Jones and 1.45% for the Nasdaq. In Europe, the main stock markets climb an average of 1.50%. The rises on Wall Street are being led by the technology sector. Wendy’s will present results on Wednesday and after closing Disney and Rivian.
The latest data from China on COVID cases show significant drops in infections, which could soon lead to the lifting of restrictions. While the inflation figures of the Asian giant showed an increase in the CPI of 2.1% (annual), a higher number than expected.
Weak Dollar, US Inflation, Bad Sign for Crypto
At 12:30 GMT US April inflation figures to be released It will be a key piece of data, followed closely, although several analysts warn that beyond the data, the Federal Reserve it will still be on track for a 50 basis point interest rate hike at the next meeting. The Consumer Price Index is expected to show a rise of 0.2%, and the annual rate to go from 8.5% to 8.1%. Speeches from FOMC members on Tuesday focused on fighting inflation.
The dollar is retreating, with DXY falling after three days of gains and after the highest close in several years. The greenback’s declines are more pronounced against commodity-linked and emerging market currencies.
Part of the weakness of the USD, in addition to the better mood in the markets, comes from the decline in Treasury bond yields. The 10-year rate is at 2.91%, at a minimum in one week, and the 30-year rate is at 3.07%. Today there will be a new placement of debt in the US and the fiscal figures for April will be known (a large surplus is expected).
The pound is not affected at the moment before the return of the novelties by the Brexit, after UK officials threatened unilateral action with regard to Northern Ireland, “if no solution is found”. In the European Union they affirm that a “renegotiation” is not an option. The Bank of England’s monetary tightening expectations have softened in recent sessions.
With respect to European Central Bank, the declarations continue (today, for now, they were Lagarde, de Guindos and Vasle) that open the doors to a rise in the interest rate as soon as in July. This is not propping up the euro at the moment.
Before the US data the metals they are rising strongly, although they remain negative for the week. Gold is trading at $1850 after bouncing from $1830, the lowest in nearly three months. The best humor also favors the Petroleum that with an advance of almost 4% recovers from Tuesday’s fall.
The Bitcoin up 2% on Wednesday and trading at $31,800, which for now does not erase the growing concerns in the crypto market. Bitcoin has lost 50% since the November peak and TerraUSD, a stablecoin, has lost 50% of its value.
Technical levels
Source: Fx Street
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