If you’ve seen any news, or posts on social media across the month of February, you may have heard the terms “Gamestop”, “stock”, “Wall street” and “Robinhood” used in conjunction.
For those unfamiliar with the world of Wall Street trading, it may have seemed too complex a story to understand. For traders, this was a David and Goliath battle that could have some long-term implications for the future of Wall Street.
All thanks to a social media network, a broker, and some short stocks. If you’ve completely missed the headlines, or you’re still confused, we give you a quick roundup of what happened and why it’s so important.
Asian markets traded cautiously as market participants continued to digest the increase in US yields early last week which underpinned some of the initial strength seen for the greenback and triggered US equities to meander away from all-time highs. Economic data was somewhat strong with better-than-expected retail sales and PMI’s released in line with expectations in the US. The week ahead will see a monetary policy meeting in New Zealand as well as speeches from FED Chair Jerome Powell who is set to testify on the semi-annual monetary policy report before the House Financial Services Committee.
Going into the week ahead, Japan’s economy expanded by more than expected in the fourth quarter, further extending the recovery from its worst recession post war. As a result, the Nikkei 225 finished the session up close to 2% breaking through the 30,000 handle; marking the first breach of the level in more than three decades. Company shares have continued to report positive earnings and with the nation also set to start vaccinations later on this week, it bodes well for market participants and investors. Conversely the Japanese Yen was amongst the weaker currencies starting the session this week as an upbeat risk tone swept across markets on growing optimism surrounding the Pandemic. Flows into safe havens were capped as Gold also remained subdued on lack of haven demand; prices have since retreated from the $1,850/oz level which was tested last week.
Last week saw the Dollar rally and press to multi month highs against a basket of currencies as a positive upbeat risk tone took centre stage. US equity markets continued to trade at all-time highs as market participants continued to digest positive earnings, progress in stimulus talks and positive economic data. As the week drew to a close, a weaker than expected Jobs report led to dollar strength cooling off as EUR/USD reclaimed the 1.2000 handle.
Last week saw the FED leave rates unchanged as expected whilst maintaining its asset purchases at the current rate. Fed Chair Powell concluded that household spending on goods has moderated whilst the labour market participation continues to remain below pandemic levels weighing on economic activity and job creation. The Fed also outlined that monetary policy is expected to remain accommodative until employment and inflation objectives have been achieved. Market participants will look ahead to the NFP jobs data to provide further insight on the state of the labour market as an additional 55,000 jobs are forecasted to have been added in the past month.
Going into the week ahead, markets in Asia started the week slightly positive whilst equity futures in the US experienced gains following on from Friday’s losses. A lack of significant bullish catalysts meant that Covid-19 headlines took centre stage as cases continued to surge around the globe.
In the UK, PM Johnson is set to announce a tightening of border restrictions with a potential announcement banning entry into the nation for nationals of Covid-19 hotspots. There were also reports circulating that those arriving in the UK will need to isolate in hotels at their own expense. This comes after Johnson announced that evidence suggests that the new variant may be more deadly than otherwise perceived. Nonetheless records shows that both vaccines are still being used and are effective against both new and old strains.
Going into the week ahead, Asian equity markets traded on edge following Friday’s losses on Wall St as participants sold the news on President-elect Biden’s stimulus announcement. Last week saw the President – elect outline his $1.9tln rescue and recovery plan which is set to include $2,000 check payments and a vaccination goal of 100mln shots during his first 100 days in office. Weaker than expected data stateside and a noticeably slower than expected vaccine rollout weighed on markets and led to riskier assets losing ground as the USD held firm and closed the week above 90.50.
Last week saw the greenback attempt to recover from what has been a tumultuous time for the currency in light of the large amount of asset purchases being carried out by the FED. Market participants digested news of a complete ‘blue wave’ after the democrats took control of both the House and the Senate paving the way for Biden and his team as they ramp up efforts to provide more support to businesses and households in the wake of the pandemic. Cases and deaths continue to rise globally despite increasing efforts to improve the speed of the vaccine rollout. To start the week, the DXY is firmer, breaking above 90.25. Conversely, EURUSD trades to multi-week lows after violating 1.2200.
Energy prices are surging, with Brent crude hitting a 10-month high after a 2% rise Australia and China have led the New Year push higher, with 2021 starting in style across the commodity and non-fiat sphere. Losses in Japanese markets ensured a less-than-perfect start, despite a better-than-expected final manufacturing PMI reading of 50. Meanwhile, Chinese stocks gained ground despite the disappointing Caixin manufacturing PMI reading of 53.0 (down from 54.9).
Last week saw the USD continue to slide lower after market participants were reminded of the FED’s dovish stance at their most recent FOMC Conference. The DXY broke 90.00 as the greenback weakened across all major assets and EUR/USD broke above 1.2250.
Cryptoassets took centre stage as BTC/USD broke to new all-time highs and finished the week up over 22%. The surge was also seen across the altcoins as ETHUSD broke above the $650 mark. Going into the week ahead; dollar strength has returned amidst fears of a new Covid-19 strain that has been sighted across the UK and as a result led to tighter restrictions on movement and travel.