- Oil retreats after Biden's ban on Russian imports
- Bitcoin soars on leaked Presidential comments
- Dollar rally halts ahead of Fed
Key Events
US futures on the Dow Jones, S&P 500, NASDAQ, and Russell 2000 rebounded in trading ahead of the New York open on Wednesday, and European shares soared—the result of aggressive dip-buying. Bullish investors are betting that the economic fallout from the conflict in Ukraine is already priced in.
Bitcoin jumped.
Global Financial Affairs
Futures contracts on the four major US indices rallied over 1.5% today after US markets hit nine-month lows on Tuesday during the Wall Street session, with contracts on the NASDAQ leading the way.
In Europe, the STOXX 600 Index opened almost 1% higher and extended gains by as much as 3%, ending three days of losses totaling 6.5%. Shares of car manufacturers and financials outperformed.
Asian benchmarks were mixed with Australia's ASX 200, the only regional index in the green, driven by banks and the technology sector.
China's CSI 300 uncharacteristically suffered a significant loss, declining 0.92% as mounting COVID cases in that country are adding to concerns of rising inflation due to increasing commodity prices. In Japan, the Nikkei 225 came within 0.59% of a bear market, as the country's economy relies heavily on oil imports. The price of the energy commodity has been skyrocketing due to the conflict in Ukraine.
US stocks ended Tuesday's volatile session lower. The S&P 500 climbed as much as 1.8% during trading, but a slump in the session's final three hours dragged the benchmark 0.73% lower.
Consumer staples led the decliners, falling 2.7%.
The selloff dragged the sector to its lowest level since Dec. 3 and probably completed a Descending Triangle. Still, the price may have found support by both a hammer developed on Feb. 23 and the 200 DMA, which has been acting as a built-in uptrend line. If the price falls below this dual support, we expect it to keep dropping.
Health Care was the second-worst performer, tumbling over 2%.
The price is in the process of forming an H&S top
The third laggard yesterday was Utilities, which gave up 1.55% of value.
The price developed a Bearish Engulfing pattern at the sector's Dec. 31 record high resistance. This sector, however, is in the second-best technical shape after Energy.
It's noteworthy that even on a day where most of the market ended in the red, the underperformers were defensive stocks. We can only assume that sectors that should rise during a market route were pressured lower by profit-taking.
Yields on the 10-year benchmark note rose for the third straight day ahead of a widely expected Fed rate increase of 25 basis points next week.
Though rates climbed, they found resistance at a point that could prove to be the right shoulder of an H&S top. However, we're betting that the earlier, bullish symmetrical triangle will win out, sending yields even higher.
The dollar fell for the second day.
The USD slide was a return move to an H&S continuation pattern.
Gold gave up earlier gains.
The yellow metal retreated from its highest levels since Aug. 10, just 2.6% from the Aug. 6 record close, fulfilling our prediction.
Bitcoin surged 8.8% after Treasury Secretary Janet Yellen inadvertently published what appeared to be a constructive approach by President Joseph Biden on regulating the cryptocurrency space. While this news could be a game-changer for the asset class, we'd like to see proof of a reversal in the supply and demand dynamic on the chart.
A rally above $45,000 could complete a small H&S bottom. As long as the neckline of the enormous H&S top remains, we are forced to put our chips on a short.
Oil prices fell after the US announced a ban on Russian imports. The retreat comes after a whopping 35% surge for the energy commodity in just seven sessions.
Up Ahead
- The ECB announces its interest rate decision on Thursday.
- On Thursday US initial jobless claims are published.
- On Friday UK GDP figures are released.
Market Moves
Stocks
- The STOXX 600 rose 2.6%
- Futures on the S&P 500 rose 1.2%
- Futures on the NASDAQ 100 rose 1.4%
- Futures on the Dow Jones Industrial Average rose 1.1%
- The MSCI Asia Pacific Index rose 0.3%
- The MSCI Emerging Markets Index rose 0.5%
Currencies
- The Dollar Index fell 0.3%
- The euro rose 0.5% to $1.0953
- The Japanese yen rose 0.25% to 115.94 per dollar
- The offshore yuan was little changed at 6.3210 per dollar
- The British pound rose 0.4% to $1.3157
Bonds
- The yield on 10-year Treasuries advanced three basis points to 1.88%
- Germany's 10-year yield increased to 0.17%
- Britain's 10-year yield was up at 1.49%
Commodities
- WTI crude fell 0.94% to $122.59 a barrel
- Brent crude retreated 3% to $123.88 a barrel
- Spot gold fell 1.7% to $2,015.63 an ounce