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Market Wrap
The economic calendar was light today and the main action came from the depreciating US dollar. After the big moves last Friday where the dollar collapsed below support and the equities markets got a boost from traders’ expectations of further stimulus, today the Nasdaq and S&P500 diverged from the Dow Jones Industrial Average.
The Dow Jones extended to new all-time highs on the back of the miners and energy sectors as commodity prices continue their momentous moves higher. Sentiment is now that the Fed would not be able to taper or raise rates soon and that the US Treasury and government will have to do additional stimulus. The DJIA is trading above 35,000 and has traded higher for 6 days in a row since breaking out of the mid-April consolidation period.
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Major European bourses including the DAX closed indifferent or lower on today, after ECB’s Philip Lane said that “Eurozone’s GDP will not return to its pre-pandemic levels until spring 2022, while the employment will restore only by 2023”.
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The EURUSD is still trading higher for the day but the price action is consolidating around the European opening price with the ActivTrader sentiment indicator showing traders backing off from their shorts but still with the majority looking for lower prices.
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The British pound is trading higher against the major currency crosses on the back of Hawkish tones from the Bank of England and the good results in the local elections for the Conservative party. The feedback from the doorstep in Scotland was also of a lack of willing to go full steam ahead with a second Independence Referendum, while the pandemic continues to be majorly disruptive. Though the SNP who control the Scottish majority say it is “when not if”, for the independence vote.
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Copper has found new highs and was trading higher than 3% on the day, but at the London close it is finding it harder to trade above today’s opening price. Prices of industrial commodities like Iron Ore and Palladium continue to reach multi-year highs as economic recovery is continuing to be priced in and while there is a lack of new supply and increasing demand. Last week there were comments from the Glencore CEO that prices needed to reach $15,000 per metric tonne for new projects to come on stream to meet demand.
