After the first two trading days of the week brought a bounce in the stock market, yesterday, the U.S. indices turned red. With them, the dollar bounced (only a bit, though), and the pressure on the European markets increased as well.
The technology sector declined the most yesterday. Nasdaq 100, the benchmark index for the sector, dropped over 2%. Apple is down for the year, while Tesla dropped another 5% or so from the highs. Of the major stock market indices, only the Dow Jones fared better, probably because it has less exposure to the tech sector.
In Europe, the markets followed the U.S. indices’ lead. At the time of writing this article, the futures are red across countries – Ibex in Spain down 0.57%, Dax in Germany down 0.2%, EURO STOXX 50 down 0.08%. As you can see, nothing dramatic, and in line with levels we’ve seen recently, but still weak.
On the commodities front, the WTI crude oil is back above $61, natural gas is up 0.21%, while gold found some support at $1,710 area.
With one day left until the NFP in the United States, the focus today will be on the Unemployment Claims release and the speech held by Jerome Powell late into the North American session. The ADP or private payrolls yesterday disappointed. While positive, the actual differed substantially from the forecast, casting doubts on the jobs market recovery. Anything out of the OPEC meeting today may move the price of oil, so that is a volatility risk for financial markets.
Markets to Watch
Crude oil, GBPUSD, silver – markets in focus today.
Crude oil cannot overcome resistance (yet), but it stays above the $60 level, which is a bullish signal on the short to medium term. Also, while belonging in the rising channel, the pressure remains to the upside. What is interesting is that on the recent move lower it found support at a confluence area. On the one hand, the $60 level acted as horizontal support, while on the other hand, the lower edge of the rising channel acted as a dynamic one. Bears should keep in mind that as long as the series of higher highs and higher lows holds, crude oil will have a hard time reversing. OPEC meeting today may move the market.
Cable formed a possible head and shoulders with the right shoulder finding resistance at the 1.40 round number. A move below the neckline spells trouble for GBP bulls but will likely be a response to a stronger dollar, should we see one.
Silver reflects the weakness in precious metals. No one quite understands the divergence of precious metals like gold and silver from the other markets, considering that inflation is on the rise. Yet, both gold and silver move with a bearish tone, with silver here making new lower lows. If the selling pressure intensifies, bears may try to push the price of silver all the way down to the measured move.
Winners and Losers
Nasdaq 100 was yesterday’s loser, with the tech sector under pressure. The USD reversed earlier losses in the week and traded higher against the EUR, GBP, CHF, JPY.