- European indices hit fresh records
- Downbeat moods on Wall Street
- FOMC minutes flag faster rate-hike pace
European indices closed at a fresh record level on Wednesday as investors react positively to the waning concerns regarding the Omikron variant. Banking, mining, and the travel sector were among the best performers. The mood was improved by the British Prime Minister Johnson, who announced that there is currently no need to shut down the country due to the spread of the Covid-19 virus. In addition, some restrictions on traveling to England have been lifted. Companies which operate on the uranium market recorded heavy gains due to political turmoil in Kazakhstan where citizens' protests against high energy prices led to the dismissal of the government.
Negative moods prevail on Wall Street today. At the beginning of the session Dow Jones extended its recent rally while both the S&P 500 and the Nasdaq traded in the red as rising Treasury yields negatively affected the tech sector. ADP data showed that private job growth totaled 807,000 in December, more than double analysts' expectations of 400,000. The IHS Markit US Services PMI was revised slightly higher to 57.6 in December from a preliminary of 57.5, pointing to another steep expansion in the services sector. However, mods significantly worsened after FOMC minutes showed the US central bank might start raising interest rates from record-low levels sooner than expected and reduce its overall asset holdings to tame high inflation. Policymakers also noted that the outlooks for the economy and the labor market had improved, while elevated inflation had persisted for longer than they had previously anticipated.
Mixed moods prevail today in most commodity markets. Precious metals prices are appreciating slightly, despite steadily rising US Treasury yields which jumped to 1.70% after FOMC Minutes. Gold erased part of early gains by still trading above $1,815.00 level while silver is defending support at $ 23.00 despite a stronger dollar. Crude oil benefits from doubts whether OPEC can increase the supply of oil as much as it intends. Matt Sallee, portfolio manager at Tortoise, which manages more than $ 8 billion in energy assets, said "Outside Saudi Arabia, OPEC sees the challenge of increasing production". "The longer OPEC is unable to increase daily production above 400k bpd, the more fearful the markets will be" said Sallee. According to today's EIA report, US crude oil inventories fell by 2.14 million barrels last week, adding to the uncertainty about maintaining supply chains.
Bearish moods can be spotted on the cryptocurrency market today. Major coins moved higher during the European session, however sellers took the initiative after the US open and early gains were erased. Bitcoin price dropped below $46000, while Ethereum tested $3720 level.
Ripple is trading under pressure this week and price returned to the major support zone around $0.80 which coincides with long-term upward trendline and lower limit of the 1:1 structure. Also the medium-term 50-day SMA (green line) crossed under the log-term 200-day SMA (red line). This has formed a bearish ‘death cross’. Should break lower occur, downward move may accelerate towards next resistance at 0.7115 which is marked with 78.6% Fibonacci retracement of the last upward wave. On the other hand, if buyers manage to regain control, then another upward impulse toward 0.8660 may be launched. Source: xStation5
