Yesterday, investors digested positive corporate earning results and considered policymakers’ next moves to support the still virus-stricken economy. The Dow reached records while the S&P and Nasdaq closed flat. The dollar is still losing value against its peers. Gold is still—timidly—rising.
While the earnings coming out are positive, the Nasdaq closed just 0.15% higher, while both the S&P and the Dow closed down 0.10%. Moving a bit more drastically, the dollar keeps losing against its peers, helping gold and crypto markets rise.
Let’s not talk about traditional markets today. It’s not that there isn’t anything to say—sure, equities are up (at new record highs, actually)—but for anybody looking at the crypto markets, there’s something bigger happening.
With progress on the US stimulus front, hopes of a continuing recovery with vaccines coming out, and last week’s positive earnings from large companies, markets felt and continue to feel risk-on. This week, further earnings are due to come out, namely: Cisco, Twitter, Uber, MGM, GM, Coca-Cola, and Disney.
Futures are flat this morning in Asia, as most investors wait for the US job report due later today. Yesterday’s session, though, was yet another great day for most indices; both the S&P and the Nasdaq reached new highs. The dollar also rose, still at low levels but continuing a rebound started earlier this year. Interestingly, gold did not benefit from the risk-on move and fell 2%.
In traditional markets, things are looking good, with more positive earnings and news coming from large companies in the US. The sharp moves up have calmed down, though, and after a move up, the S&P closed just 0.10% up, while the Nasdaq closed flat.
With Google seeing record growth, Amazon’s performance rising, and then, on a broader level, Democrats in the US pushing ahead with an aggressive stimulus plan, one can’t help but buy into risk.
As retail investors’ focus cycles from GME stocks to silver, global equities seem to have recovered from last week’s sharp descent. The S&P closed the session up 1.8% and the Nasdaq gained almost 2.5%. Gold continued to perform positively as silver rose another 7% on the session. It was also interesting to see the dollar, which seems to have bottomed out, continuing to rise.
Last week was important on many levels, we passed 100 million virus cases, President Biden pushed plans to attack fossil fuel harder than oil producers probably anticipated, the GameStop battle between retail investors and hedge funds took place with massive losses on both sides, and more.
Think of yesterday and reverse it: GameStop shares fell, equities rose, the dollar retraced previous gains, treasuries retreated, pushing the 10-year yield up to 1.05%, and oil dropped further. Only gold remained flat amidst all the movement.
With disappointed earnings from major tech companies and obvious concerns about valuations, investors, it seems, are starting to doubt the incessant bull run we experienced across assets —and the advertised economic recovery.
Whether it is because we’ve just passed 100 million coronavirus cases globally or because of the hurdles the current US administration is facing in regards to a stimulus plan, markets felt slightly bearish across the board.