Futures in the United States and Europe are trading higher today, following the erratic performance of stock markets last week. The S&P 500 fell about 0.6% last week, while the blue-chip Dow fell 1.1%. The Nasdaq, the tech-savvy index, dropped 0.7% during the week.
The reason behind the turmoil is that investors are unsure how the withdrawal of the central bank’s stimulus will affect economic recovery, which is already being hampered by a ramp-up in coronavirus cases caused by the Delta variant. Investors should keep a close eye on the tapering situation in order to predict how markets could move in the near future.
This week’s big event is the Jackson Hole Symposium. It would virtually take place on Thursday and Friday. The event will be attended by leading financial professionals, including officials from various countries. Stock traders will scrutinise comments in order to better understand the US economic recovery. This event may also give clues about the Fed’s plans to reduce its monthly bond purchases of $120 billion.
Similarly, stock market participants will also be watching the German Flash Manufacturing PMI report, which is set to be released today. The data would give investors valuable insight into how European countries are currently performing. Readings have been higher than expected for the last two months. Currently, everyone is wondering whether the data will show signs of economic growth slowing, as it has in other countries.
Moving forward, investors should anticipate some volatility in stock markets as governments around the world adjust their policies in response to the state of inflation and economic growth. Furthermore, Wall Street typically reacts more to changing interest rates than to tapering, so we can anticipate a lag between tapering and the first interest rate hike.
Bitcoin, the gold standard of cryptocurrencies, has shattered the critical $50,000 mark and is on a multi-month high. This is the highest price since the 15th of May. Bulls have helped the asset break through a number of technical barriers, including the $47,000 low resistance in April.
A rise in the adoption of cryptocurrencies is a major reason for the recent surge in prices. Crypto adoption has jumped a whopping 881% over the past year. Similarly, the total market capitalization of digital currencies was $2.17 trillion on Sunday. The rise in market cap has been supported by a boost of 18% in the price of Cardano and a gain of 11% in the Binance coin. Dogecoin and Solana also increased by 9% and 73%, respectively during the same time period.
Oil prices have slumped drastically, posting their biggest week of losses in nearly 9 months. Brent crude settled at $65.18 per barrel last week, dipping nearly 8%. The future outlook for oil demand appears grim with the rise of coronavirus cases and countries raising restrictions, putting a curb on free movement and implementing social distancing measures.
On the supply side, US production has increased to 11.4 million barrels per day, and drilling companies have been installing additional rigs for the last three weeks. Similarly, OPEC countries are gradually increasing supply, which was halted in 2020. Moving forward, futures contracts show that the market expects an adequate supply of oil in the coming months.
The dollar index has risen in recent days, aided by a hawkish Fed, which is hinting that the majority of policymakers believe the central bank should begin tapering its stimulus before the end of the year. As a result, the dollar surged to its highest level in nearly 9 months, raising the cost of holding gold.
Rising corona cases, on the other hand, and concerns about slowing economic growth have provided some support for the precious metal. Traders should dissect the Jackson Hole Symposium discussions to determine how markets will react in the short term.
Asian Pacific stock markets are up today after Hong Kong’s Hang Seng index recovered from a massive drop last week. Because of the uncertainty surrounding regulatory crackdowns on Chinese technology firms, the index fell as much as 20% below its February peak.
As of 11:47 p.m. EST, the Nikkei jumped 1.73% while the Shanghai Composite Index was up 1.00%. The ASX 200 index surged 0.35%, and Seoul’s Kospi rose 1.46%. The Hang Seng index, in Hong Kong, has climbed 1.83%.