Following Thursday’s sharp reversal for crude oil and US equity markets, it will be interesting to see how the markets will close out the week. The plethora of central bank meetings this week failed to derail the rally in bond yields, albeit they were off their weekly highs at the time of writing. With the weekend fast approaching and tensions between the US and China rising with heated exchanges at the sides’ first meeting under the Biden administration, the appetite for risk is going to be low you would think. Although index futures point to a higher open on Wall Street, I wouldn’t be surprised if those gains evaporate later on in the day. Yet, it is not exactly risk completely off just yet, given the central banks’ desire to provide as much support for as long as needed in spite of inflationary concerns. As a result, we might see lots of chop and churn in the coming days as investors weigh the prospects of faster economic recovery against rising inflation concerns.
Crude oil has broken its bullish trend – is this it for the oil rally or are we going to see dip buyers step back in after Thursday’s correction? Although oil has bounced back, sentiment remains cagey after the big sell-off. I wouldn’t be surprised if we see further losses.
Meanwhile the tech-heavy
Nasdaq has put up a decent fight in recent days in spite of the rising yields, but unlikely the Dow and S&P, it remains some distance from its record high. The bullish trend line has already been broken. But if this is going to turn ugly, the other US indices will need to start heading lower too.
It is worth keeping a close eye on
Tesla as well, after it was reported that China will restrict Tesla usage by military and state personnel.
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