Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Opening Bell: Economic Rebound Hopes Lift Futures, Global Stocks, Oil, Bitcoin

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewFeb 10, 2021 07:18
ca.investing.com/analysis/opening-bell-economic-rebound-hopes-lift-futures-global-stocks-oil-bitcoin-200448477
Opening Bell: Economic Rebound Hopes Lift Futures, Global Stocks, Oil, Bitcoin
By Investing.com (Pinchas Cohen/Investing.com)   |  Feb 10, 2021 07:18
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
  • Markets debate the likelihood of rising inflation
  • Dollar rebounds from further losses
  • Gold confirms resistance

Key Events

Global equities extended their rally for an eighth straight session on Wednesday, thanks to US President Joseph Biden’s fiscal stimulus initiative, strong earnings releases and falling coronavirus cases. This morning, futures on the Dow, S&P 500, NASDAQ and Russell 2000 are all pointing to a higher US open.

Bitcoin is attempting to reach $50,000 once again, a level it's been struggling to hit, so far without success. The oil rally continued. 

Global Financial Affairs

The MSCI World Index rose 0.2% today, its longest winning streak since November. The trading pattern emerging, however, opens the possibility of a top.

MSCI World Index Daily
MSCI World Index Daily

The global benchmark is struggling against the top of an ever-expanding pattern known as the Broadening or Megaphone pattern. Its development demonstrates irrational behavior, suggesting a loss of leadership, a potential sign for a top.

While prices rise with both highs and lows, as buyers and sellers expect the trend to continue rising, declines are marked by falling highs and lows, as both supply and demand are on the same page about that as well.

A broadening pattern however, posting higher highs but at the same time lower lows shows that investors are unsure. However, the pattern needs to break to the downside in an obvious way in order to top out. On the other hand, a catalyst could create new leadership and move the market higher. The RSI shows that for now momentum supports the move up, which, if continues, will catapult prices upward.

All this technical conflict reflects investors’ indecision on whether the current, largest, combined monetary and fiscal policies in history will spark reflation, a healthy rise in prices that helps the economy grow or destabilizing inflation, that will upend the delicate economic recovery from the worst recession since the Great Recession.

Investors are also concerned that inflation rising for the first time in 12 years will disrupt financial markets, as even a healthy reflation can siphon demand away from equities in favor of rising Treasury yields.

Even as US futures were well in the green today, stocks in Europe struggled for traction amid mixed earnings results from a variety of companies including French banking giant, Societe Generale (PA:SOGN) and Danish shipping operator, AP Moeller-Maersk (CSE:MAERSKb).

It’s noteworthy that contracts on the NASDAQ 100, representing an economy in lockdown, are up 0.5% at the time of writing while futures on the Russell 2000, which represents a return to an open economy are lagging, up just 0.2%. This dichotomy of growth stocks leading the rally, while value shares lag, shows the disagreement among investors on the impact of rising inflation on markets.

Earlier, major Asian indices were in the green, overcoming Tuesday's lackluster US session, on the narrative that US fiscal stimulus and slowing growth in coronavirus cases infused regional investors with vigor. China’s Shanghai Composite leaped 1.4% despite falling consumer prices buoyed by the first rise in a year in factory prices. Signs of continued recovery in China received an even more positive reaction in Hong Kong where the Hang Seng surged 1.9%, to a three-week high.

US stocks paused yesterday, ending a six-day rally on profit taking. Traders are trying to assess if rising inflation will help boost companies' profits, causing a ripple effect and buoying economic growth or if it will further damage an already fragile economy and drive equity prices lower.

The S&P 500 Index stepped back from an all-time high, on the heels of a 5.4% gain this month. As opposed to growth vs value projected in today’s futures, Tuesday’s Russell 2000 trade helped it notch the longest rally since December 2019, while the NASDAQ 100 had to struggle to register a gain.

Investors are waiting for US consumer prices data for January, as well as a speech from Federal Reserve Chairman Jerome Powell on the labor market later today.

Yields on the 30-year Treasury are holding at 1.9% after crossing the 2% threshold earlier this week.

After hitting a high on Jan. 12, yields on the 10-year Treasury note have been in retreat.

10-year Treasuries Daily
10-year Treasuries Daily

But the congested downward tilt appears to be a falling flag, as Treasury investors pause amid a selloff. An upside breakout will take rates above 1.2 percent and higher.

The dollar has matched the decline in yields. The greenback fell back below the neckline of a H&S bottom, its rising channel since the Jan. 6 bottom and back into a falling wedge since the March high.

Dollar Index Daily
Dollar Index Daily

While this puts our bullish expectation to the test, we still anticipate the USD will rebound, especially if yields complete their bullish flag.

Gold has been rising on dollar weakness.

Gold Daily
Gold Daily

However, it has proven resistance for the second day amid a confluence of technical signposts on the chart, creating a dream short from a risk-reward perspective.

Bitcoin extended gains for the third day, struggling against a doji—when traders stopped for a breather—after Tesla's (NASDAQ:TSLA) SEC filing revealed the carmaker bought $1.5 billion worth of Bitcoin as an investment and to allow its products to be bought with the cryptocurrency.

Bitcoin Daily
Bitcoin Daily

Once the digital currency overtakes Tuesday’s high, we expect it to continue and retest the psychological $50,000 level.

Oil pushed higher for the eighth straight day, its longest winning streak in two years, a sign of hopefulness of reopening economies, as oil heads to $60 

Up Ahead

  • Lunar New Year public holidays begin in nations across Asia, with China breaking for a week.
  • US initial jobless claims are released on Thursday.
  • Bank of Russia’s policy decision comes Friday.

Market Moves

Stocks

Currencies

  • The Dollar Index was little changed at 90.43, having rebounded from a 0.2% drop.
  • The euro rose 0.1% to $1.2131.
  • The British pound gained 0.1% to $1.383.
  • The Japanese yen was little changed at 104.57 per dollar.

Bonds

  • The yield on 10-year Treasuries declined less than one basis point to 1.16%.
  • The yield on two-year Treasuries was unchanged at 0.12%.
  • Germany’s 10-year yield rose less than one basis point to -0.44%.
  • Britain’s 10-year yield climbed one basis point to 0.473%.

Commodities

  • West Texas Intermediate crude dipped 0.1%.
  • Gold strengthened 0.3% to $1,843.12 an ounce.
Opening Bell: Economic Rebound Hopes Lift Futures, Global Stocks, Oil, Bitcoin
 

Related Articles

FactSet Research Systems Inc
Podcast : Financial Market Preview - Wednesday 18-May By FactSet Research Systems Inc - May 18, 2022

US equity futures are indicating a lower open as of 05:00 ET. European stocks are mostly softer, following mostly firmer Asian markets. Fed members support 50bp rate hikes in the...

Opening Bell: Economic Rebound Hopes Lift Futures, Global Stocks, Oil, Bitcoin

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email