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Despite the strength of the US dollar among major currencies, emerging market currency pairs traded quite mixed against the greenback. While the Russian rouble (RUB) reversed some of its earlier gains, the South African rand (ZAR) and especially the Indian rupee (INR) traded stronger compared to the dollar.
European stock indices traded quite mixed at the start of the trading session on Thursday. While for example the Spain 35 and Swiss 20 traded with a moderate downside, the Germany 30 index tested again the 14,000-mark and the Netherlands 25 index was up by one per cent at times. The sentiment in Asia was quite mixed as the Japan 225 index traded at the highest level in decades, while the China A50 was at times trading two per cent lower.
Cryptos started to move towards a recovery by Wednesday afternoon, with the price of Bitcoin moving clearly above $38k by Thursday, while Ethereum prices jumped above $1,170 by Thursday morning, which is the highest price since Monday.
On Thursday the ECB’s monetary policy statement from the last meeting of the Governing Council can be expected and in the US the weekly number of jobless claims will be published.
The euro was again under pressure, not only because of the strength of the greenback, but also due to the weakness of the common European currency, which on Wednesday also declined against other majors like the JPY or GBP.
Fundamentals were quite mixed in Europe with the Italian industrial production taking a further hit in November, declining by 4.2% on an annual basis, while the data for the EU was surprisingly positive and showed only a 0.6% decline.
Inflation in the US increased faster than anticipated with the consumer price index (CPI) reaching in December 1.4% on an annual basis after the reading of 1.2% in the previous month.
On Thursday the accounts of the monetary policy meeting in December of the Governing Council of the European Central Bank will be released.
Gold prices ended the trading day on Wednesday lower and extended losses by Thursday morning. While this can be seen as a stabilization of some sort at a lower level, compared to the volatility of the past week, prices for the precious metals like gold and silver indeed reduced their up and down-swings this week. Platinum prices on the other hand were pushing significantly higher since Wednesday.
Fundamentals, namely a stronger dollar and lower yields on US Treasury notes might have been indeed on the side of bears in precious metals, but still concerns about when the Fed will actually be forced to raise rates (there are reports of 2022 or 2023 at this time) and the impact of the expanding fiscal stimulus extended by the incoming Democrats administration in the United States might worry some investors not solely focusing on short-term impacts.
After oil prices hit a new 10-months high on Wednesday night, the market moved overall lower with some increase in volatility seen ahead of the weekly data release from the Energy Information Administration (EIA). According to that data crude oil stockpiles were down by 3.25 million barrels compared to the previous reporting week. This might have been a slightly bigger draw than anticipated but still fell short of the 5.82 million barrel draw announced by the American Petroleum Institute (API) on Tuesday.
Gasoline and distillate stockpiles on the other hand increased by 4.79 and 4.4 million barrels respectively, which was roughly two million barrels more than anticipated.
Major US stock market indices like the US 500 or the US Tech 100 index ended the trading day on Wednesday with a moderate upside, while the US 30 and US 2000 indices closed slightly lower. Still, at the current valuations these indices, except for the US 2000 are still trading below the all-time high from the previous week.
Real estate sector stocks (US Real Estate ETF +1.12%) strongly rebounded, while banks (US Banks ETF -0.64%) had to give up some gains from the previous day. One potential factor contributing to this move might have been the fall in US Treasury note yields from its highest level since March 2020.
Stocks of the electric car maker Tesla traded around two per cent lower in European OTC markets by Thursday morning after the US NTHSA ordered a recall of more than 158 thousand older Model S and Model X vehicles due to issues affecting their on-board computer. The well-known issue of limited write cycles of the memory device in some Tesla led to outages, which affected owner’s ability to use different systems including air conditioning and defrosting systems of their cars. Failures were reportedly as frequent as in 17% of older Model S vehicles made until 2015.
Investors can now prepare for the upcoming earnings season, with major Wall Street banks including Citigroup and JPMorgan Chase releasing their quarterly results on Friday.
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