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The US dollar recovered against other majors and clearly outperformed in many EM pairs like the USD/ZAR or USD/RUB on Tuesday.
The total market cap of the crypto market recovered and again pushed above $2.1 trillion with Ethereum and Ripple gaining double-digit percentages compared to the previous day by Wednesday morning, while Dogecoin suffered some losses but was still the number five in terms of market cap not counting stablecoins.
Most major equity indices around the world traded clearly in the red on Tuesday. The China A50 index managed to recover these losses with ease by Wednesday morning, while many other indices traded almost flat after the losses of the previous day. Some European markets like the Netherlands 25 or Spain 35 were trading with a moderate upside after markets opened possibly pushed by positive earning results from companies like Heineken.
On Wednesday Canadian consumer price index (CPI) data as well as the interest rate decision by the Bank of Canada will be published. From Australia data on business confidence can be expected.
After trading as high as 1.208 on Tuesday, the EUR/USD pair was down to lower 1.20 levels while the dollar overall recovered against other major currencies. Compared to other majors the performance of the common European currency was mixed. It was able to improve its position against the Australian dollar and the pound sterling, while trading slightly weaker against the Japanese yen (JPY).
This week was so far relatively light on fundamental data, which might change in the coming days when the European Central Bank (EBC) announces its monetary policy decision on Thursday and the French Business Climate Indicator will be released, while from the US statistics on jobless claims and existing home sales will come in.
Gold prices ended the day on Tuesday marginally higher, while most other precious metals like silver and platinum were in the red. By Wednesday morning the sentiment seemingly turned positive with gold taking aim at the intraday high from Monday, while silver also edged higher, gaining by Wednesday morning at times more than 1.4% compared to the closing rate of the previous day.
As inflation is starting to pick up, Chairman of the Federal Reserve Jerome Powell sought to mease concerns in a recently published letter that the central banking institution would not seek inflation “above 2 per cent for a prolonged period”. However, there are concerns that all the fiscal and monetary stimulus created an excess of deposits over the past year, while the velocity of money significantly declined and if the velocity as well as credit/deposit ratio should improve to previously normal levels, this could translate into elevated inflation.
After oil prices reached yet another one month high around the time the European trading session started on Tuesday, a strong retracement set in following the negative sentiment in other markets despite reports of outages in Libya as well as later on presented weekly data by the API that crude oil stockpiles increased by a bit more than 0.4 million barrels over the past reporting week, while gasoline stockpiles were down by 1.6 million barrels.
It remains still unclear what impact the pandemic will have over the next month as many countries, notably in Europe are continuing with relatively heavy handed restrictions, which might still affect the summer travel season. On the other hand in terms of economic growth estimates like those from the IMF are rather positive than before.
On Wednesday the Energy Information Administration (EIA) is presenting its weekly statistics on crude oil, gasoline and distillate stockpiles.
Major stock market indices were clearly in the red on Tuesday with the disappointing earnings results also after markets closed hardly being any help. Stocks of the streaming video service Netflix traded at times more than ten per cent down in after-hours trading following disappointing results in Q1, despite a revenue growth of 24 per cent compared to the previous year, which more or less matched investors’ expectations and earnings-per-share at $3.75, which was significantly higher than expected. What really disappointed was the slow growth in new subscribers as a bit less than four million net new subscribers were reported, which was significantly below estimates.
Airline stocks were noticeably underperforming many other sectors with stocks from Delta Air Lines (-3.56%) and American Airlines (-5.50%) under pressure and Boeing (-4.01%) closing as the weakest stock included in the Dow Jones Industrial Average that day. This comes after disappointing earnings results from United Airlines (-8.49%) which highlighted the issues the industry is facing as the airline also predicts that it could take up to 2023 to return to pre-pandemic profitability. Boeing meanwhile might have been affected by the announcement that its CFO would leave the company in the following months.
More earnings can be expected this week including from Halliburton and Verizon on Wednesday as well as AT&T and American Airlines on Thursday.
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