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Markets Upbeat Ahead of ECB Meeting

Markets Upbeat Ahead of ECB Meeting

Stock Market Today

Futures in the United States and Europe are up today. Financial markets are upbeat because investors interpreted Friday’s disappointing jobs report as a reason for the Fed to postpone its tapering of bond purchases. The Federal Reserve Chair, Jerome Powell, stated that the labor market’s health remains a strong factor influencing their tapering decision, and that the central bank will closely monitor economic data in coming months to avoid making any impulsive decisions.

Stock Market

Despite the rise in Delta coronavirus cases and slowing economic growth, global financial markets are at all-time highs. Consumer spending in the United States is declining, and as a result, Goldman Sachs has reduced its forecast for U.S. growth in 2021. The growth in coronavirus deaths is reducing consumer confidence and indicating gaps in vaccination campaigns. On the other hand, regulatory approvals for vaccinations are likely to persuade hesitant Americans to get their shots and help officials be more aggressive with their vaccination coverage.

Stock market traders should remember that the European Central Bank (ECB) will release its monetary policy statement on Thursday. This is a major event because investors will be looking for clues as to how and when the ECB plans to exit its massive stimulus programme. Government bond prices are indicating that a correction is imminent. On Monday, the yield on the German 10-year Bund, the benchmark for European treasury markets, was at its highest since mid-July, at negative 0.37%.

Similarly, the ZEW economic sentiment index will be released today. The data will inform investors if experts and analysts are optimistic about the short-term economic outlook. Americans may be able to predict how the Fed will react in the short term based on clues from their European counterparts.

Cryptocurrencies

Over last few weeks, alt coins have been growing faster than the sector benchmarks, Bitcoin and Ethereum. Solana’s digital coin, SOL, is one example of such a rapidly rising crypto. It has taken SOL merely three weeks to triple its market value and reach an unbelievable $41 billion. Its supporters claim lower transaction costs and higher speed of transactions as drivers for its rapid rise in the blockchain space. According to Solana’s website, the cost per transaction is $0.00025.

Earlier in June, the company announced that it had raised $314 million in funding from investors such as venture capital firm Andreessen Horowitz. It is currently the seventh largest cryptocurrency and could potentially rival Ethereum in the long term.

Going forward, crypto traders should understand that technological advancements driving alt coin market caps higher may not be justified, and that some cryptocurrencies may simply be overvalued due to high investor optimism. Having said that, digital assets are driving a much-needed upgrade in financial markets, and the overall outlook for the sector in coming months appears bright.

Oil

Oil prices have been under pressure since last week’s disappointing labor market report, which showed a slowing U.S. economy. As a result, oil prices fell, but the reduction in oil supply caused by Hurricane Ida’s aftermath cushioned the blow.

However, oil prices have fallen even further this week after Saudi Arabia announced a price cut for Asian countries. Asia is the biggest customer of oil and, according to Saudi Aramco, Saudi Arabia’s state oil group, prices will be cut by at least $1 per barrel. Given the predicted rise in oil supply in the near future, as expressed by OPEC+, and the slowing economic recovery, oil prices are expected to remain under the gun in coming weeks.

Gold

The yellow metal is performing well after last week’s job report. The weak economic report raised expectations that the Fed would likely delay tapering of its stimulus and hence postpone its timeline for raising interest rates as well. Because of this situation, the U.S. dollar has been depreciating against a basket of currencies. Gold generally moves opposite to the dollar and, hence, has been on a rising trajectory in recent days. Spot gold was at nearly $1,826 per ounce as of 11.25 p.m. EST.

Asian Markets

Chinese stocks rose in yesterday’s session after Liu He, China’s vice premier, stated that Beijing would continue to support small-scale private businesses despite regulatory crackdowns on education and technology sectors. Moreover, investor sentiment in Japan has risen in the aftermath of Prime Minister Yoshihide Suga’s unexpected resignation. Stock traders believe that the next person in charge will be more focused on reducing coronavirus cases and boosting economic growth.

As of 10:28 p.m. EST, the Nikkei rose 1.05% and the Shanghai Composite Index was up 0.31%. The ASX 200 index dropped 0.46% and Seoul’s Kospi declined 0.50%. The Hang Seng index, in Hong Kong, has jumped 0.55%.