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The US dollar continued to improve against other major currencies and also some emerging markets by Tuesday morning. The USD/RUB pair moved for the first time since early December above the 76.0-mark and the USD/ZAR also continued pushing North. Meanwhile the USD/TRY pair remained relatively stable around the 7.4-level.
The recovery in cryptos during the day on Monday was rather short lived with Bitcoin falling under $32k after being unable to break above the $35 mark. Ethereum also had a volatile trading session as prices again pushed lower after reaching a new all-time high during the day. Some see the rally in Ethereum to be due to increased interest from institutional investors amidst the attention the decentralized finance (DeFi) concept is gathering in those circles.
The overall sentiment in the equity markets by the start of the European trading session on Tuesday morning was rather bearish. Investors should also note that Volatility Index VIX exploded higher on Monday despite the S&P 500 index trading close to its all-time high.
On Tuesday data on unemployment from the UK can be expected. Then in the United States data on house prices, consumer and manufacturing confidence will be released.
Given the strength of the dollar, the EUR/USD pair retraced towards the support levels around 1.211, while the euro itself maintained a relatively stable position against other major currencies like the pound sterling (GBP) or the Swiss franc (CHF).
The Ifo survey released on Monday indicated deteriorating conditions in for the German economy, while expectations were also down from 92.8 in the previous reading to 91.1. Results were overall worse than anticipated.
On Tuesday again more data from the US can be expected, including the FHFA House Price Index and the Conference Board’s Consumer Confidence measure.
European stock market indices like the Europe 50 closed with a noticeable downside on Monday and tested further lows on Tuesday morning before starting to turn around into the green territory minutes after the opening bell rang in major European markets.
After stocks of major banks like Credit Agricole, BNP, Unicredit, ABN Amro, ING Groep closed more than four per cent lower on Monday, bank stocks were some of the best-performing equities by Tuesday morning, Airbus traded meanwhile almost unchanged after also sustaining losses in excess of four per cent on the first trading day of the week. Over the past week, Airbus stocks were down by almost seven per cent. Recently a significant corona outbreak was announced at the company’s plant in Hamburg, prompting the order for roughly 500 people to go home for self-isolation.
The expected resignation of the Italian Prime Minister Conte and the following move to seek a new mandate could be an event for investors to pay attention to, just as the developments in terms of the COVID vaccines and the governments’ efforts like those of the EU to get suppliers like AstraZeneca to make good on their commitments for supplies, which are seen as important to end the pandemic.
The recovery in oil markets was rather short-lived as oil prices were again noticeably down by Tuesday morning, with a barrel of WTI crude oil in the March future contract trading below $52.4.
Oil prices could be supported in the meantime of lockdowns by new orders by the new US administration, which put a hold on new oil and gas explorations but also by actions of the private sector, such as BP reducing its oil and gas exploration division as the company wants to focus on its long-term expectation of an economy which relies on lower carbon emissions.
On Tuesday the American Petroleum Institute (API) publishes its weekly statistical bulletin, which includes data on inventory changes on stockpiles and on Wednesday the Energy Information Administration (EIA) releases its weekly report on crude oil, gasoline and distillate inventory changes.
In a highly volatile trading session, major stock indices like the US Tech 100 and US 500 ended the day still in the green, while a further retracement was observed in futures markets by Tuesday morning. Meanwhile the small-cap US 2000 and the rather focused US 30 index ended up lower at the end of the day.
Significant volatility was observed around 3 and 4 PM GMT with markets initially climbing to new record heights, only to crash minutes later. Within just one hour the US 500 moved from top to bottom by more than 1.6 per cent.
While Tesla (+4.08%) reached a new all-time high during the trading day, at times trading at more than $900 per share, investors need also to take into account the increasing number of competitors starting to offer their products that start to actually compete with Tesla model range. Competition now stems not only from established car makers like VW or Mercedes catching up in the EV market, but also newcomers in the biggest EV market on the planet, China. There the company Xpeng Motors (-2.26%) announced that it would implement changes to its EVs, which will include features like automatic overtaking and lane changes.
A significant earnings week is about the get into full swing with quarterly results from companies including GE, AMD, Microsoft, Verizon, Starbucks and others expected on Tuesday. Then on Wednesday Apple, Boeing, Tesla, AT^A and many more are publishing their results.
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