Covid jitters weighing on equity markets Risk aversion is firmly in place as the Delta Covid variant spread is triggering a flight to safety as global economic concerns intensify.  Global investors are growing anxious and selling stocks, commodities, and even cryptocurrencies to buy US Treasuries.  With coronavirus surging across both advanced and developing nations, the bond market is delivering a one-way trade, lower global bond yields.  Equities were ripe for a pullback given Wall Street was in agreement that this is ‘as good as it gets’ for peak earnings, economic growth, monetary stimulus, and shortly fiscal support.  It is hard to hold risky assets over the short term now that we have past-peak everything. US stocks pushed even lower after reports that the US and … [Read More...]

Stocks rebound but flat across the week European stocks are rebounding on Friday after Covid inspired losses from the previous session. Instead, corporate updates and Eurozone inflation have taken centre stage. Investors are upbeat as they look to the start of the quarterly earnings season. Numbers are expected to show an improvement as businesses across the continent reopened following the pandemic. Today’s move higher comes following steep losses in the previous session as investors fretted about rising Covid cases. In many countries, vaccination rates still aren’t at levels where the threat of another lockdown can be avoided. As such, the Covid risk to the market still exists. Recent lockdowns in parts of Asia are serving as a reminder of that. European stocks have seen a solid runup … [Read More...]

The Australian dollar started the day quietly, but a solid US inflation release has sent the Aussie considerably lower. Currently, AUD/USD is trading at 0.7431, down 0.53% on the day. US inflation shines US consumer inflation rose sharply in June. Core CPI climbed 0.9% YoY, well above the estimate of 0.4% and ahead of the May read of 0.7%. On an annualized basis, Core CPI jumped 4.5%, above the consensus of 4.0% and up from the May reading of 3.8%. The strong numbers have lifted the US dollar, as speculation grows that the Federal Reserve may be forced to tighten policy sooner and more aggressively than expected in order to curb inflation from getting out of control. The Fed has long maintained that that inflation is transitory, … [Read More...]

The British pound is directionless in the Friday session. In European trade, GBP/USD is trading at 1.3767, down 0.09% on the day. GDP, Manufacturing Production underperform The UK released a data damp to end the trading week, and the releases that investors were most interested in disappointed. GDP for May slowed to 0.8% MoM, well below the revised April reading of 2.0% and below the consensus of 1.0%. Although the recovery is gaining steam, and PMI reports are pointing to strong growth across economic sectors, GDP is still about 3 percent below the pre-Covid levels (February 2020). Still, the economy continues to expand, and the May report marked the fourth straight month of expansion. With the government determined to remove all Covid restrictions in 10 days time, we … [Read More...]

The Canadian dollar has started the week with losses. In the North American session, USD/CAD is trading at 1.2457, up 0.31% on the day. The US dollar ended the week on a downturn against most of the majors. The Canadian dollar jumped on the bandwagon, as USD/CAD fell 0.92% on Friday. The reason for the US dollar’s downturn was the surprising surge in the US unemployment rate, which rose from 5.6% to 5.9. The jump in unemployment made investors uneasy, with growing speculation that the labour market is still not strong enough to push the Fed to tighten policy. Nonfarm payrolls was solid, as the reading of 850 thousand dwarfed the consensus of 700 thousand. Despite the positive NFP report, the US dollar ended the week on a … [Read More...]

The overnight session was another sideways in Seattle sleeper for most asset classes as even equities struggled to maintain upward momentum. US yields edged slightly lower; gold fell while oil rallied but remained confined in pre-OPEC+ noisy range-trading and industrial metals did much the same. The US dollar ground higher as the forex market continues to signal its concern about the impact of the delta variant globally and its lingering post-FOMC taper concerns. More hawkish rhetoric from another Fed official hit the wires late in the session. But Waller’s comments that tapering and tightening expectations might occur sooner had little effect. Financial markets, generally, seem to be settling in for the global manufacturing PMI dump tomorrow and the US employment data on Friday. … [Read More...]