Breaking News
Black Friday SALE: Up to 54% off InvestingPro! Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Opening Bell: Equities Stall Despite Fed Easing Commitment; Gold, Dollar Rise

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewJan 13, 2021 12:26
uk.investing.com/analysis/opening-bell-equities-stall-despite-fed-easing-commitment-gold-dollar-rise-200452043
Opening Bell: Equities Stall Despite Fed Easing Commitment; Gold, Dollar Rise
By Investing.com (Pinchas Cohen/Investing.com)   |  Jan 13, 2021 12:26
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
  • Fed officials' comments of continuous QE failed to boost equities
  • Treasury yields drop

Key Events

Statements from two Federal Reserve officials on Tuesday dispelling expectations that the US central bank would reduce quantitative easing anytime soon failed to lift equities in pre-US open trade on Wednesday. Futures on the Dow, S&P, NASDAQ and Russell 2000 all traded lower, having hit record highs in early January.

Both gold and the dollar traded higher.

Global Financial Affairs

In Europe, the STOXX 600 Index was mostly flat, with soft profit guidance}} from Danish wind farm developer Orsted (CSE:ORSTED) weighing on utilities and offsetting gains led by French grocer Carrefour (PA:CARR) following a merger approach by Canadian convenience store operator Couche-Tard (TSX:ATDb).

Stocks in Asia were mixed, with China’s Shanghai Composite (-0.25%) leading the declines among the major regional benchmarks due to concerns on rising virus cases in northern China as well as heightened tension in US-China relations. Sources in Washington say that President Donald Trump is still considering adding Alibaba (NYSE:BABA) and Tencent (NYSE:TME) to the China investment ban.

Japan’s Nikkei 225 (+1%) outperformed, extending a bull run to its fifth session in a row and hitting a 30-year high thanks to a rally in semiconductors on expectations of a strong recovery in the industry.

American shares crawled higher on Tuesday on conflicting coronavirus news. COVID-19 has reared its head again in China, and Sweden has announced tighter restrictions to reduce the spread of the virus while the ongoing vaccine rollout is still expected to facilitate the world moving on from the pandemic.

However, the story of the day was Treasuries, after Federal Reserve Bank of St Louis President James Bullard reiterated that the only policy on the Fed docket right now is getting the economy through the pandemic, with the same message repeated later by Boston Fed chief Eric Rosengren.

What is surprising, however, is that these statements did not prompt investors to increase risk or buy equities. Rather, they bought Treasuries. After all, investors should be happy to know that the Fed is avoiding repeating the 2013 “taper tantrum,” when the Fed began unloading its fattened spreadsheet, sending a ripple of panic that markets would collapse.

Also, falling yields should alleviate concerns of rising inflation and how that might affect any economic recovery from the worst recession since the Great Depression.

Is cheap money no longer enough to keep pushing stocks higher? Investors may have found themselves unsure what do amid the cacophony of headlines as the Democrats move to impeach President Trump for the second time.

The divide among Americans identifying with the two political parties has deepened, and the fallout can be seen on social media—both Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) banned Trump, while Google (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) cut off Parler, an app conservatives were migrating to even before the Trump ban.

Yields, including on the 10-year note, gapped down—a rarity recently—after yesterday’s shooting star developed when rates failed to breach the top of a falling channel.

Treasuries Daily
Treasuries Daily

Yields are likely to return toward the bottom of the channel, whose technical significance is underlined by the 50 DMA.

The dollar rebounded from a second-day loss to gain slightly.

Dollar Index Daily
Dollar Index Daily

Yesterday, it completed a bearish engulfing pattern, having neared the supported-resistance zone since Dec. 3 and the 50 DMA “guarding” the falling trendline.

Gold is squeezed between the 50 DMA resistance and the 200 DMA support.

Gold Daily
Gold Daily

The yellow metal is struggling between the resistance of a falling channel in place after it hit its first record since 2011, during August 2020 and a potential H&S bottom.

Bitcoin found its footing on the support of Monday’s hammer, above the uptrend line since the Dec. 12 low.

Bitcoin Daily
Bitcoin Daily

Although the cryptocurrency's price and volume indicators provided sell signals, we still consider it a buying dip that provides an attractive risk-reward ratio if the timing is right.

Oil is on course for its longest upward streak in two years, after it neared the $54 level, for the first since Jan. 24—well before the pandemic hit markets.

Oil Daily
Oil Daily

On the other hand, if the price closes at this point, it will have created a shooting star, while the RSI is the most overbought since April 2019.

Up Ahead

Market Moves

Stocks

Currencies

  • The Dollar Index gained less than 0.1% to 90.14.
  • The euro fell 0.1% to $1.2196.
  • The British pound climbed 0.1% to $1.368.
  • The Japanese yen was little changed at 103.74 per dollar.

Bonds

  • The yield on 10-year Treasuries decreased one basis point to 1.12%.
  • The yield on two-year Treasuries jumped less than one basis point to 0.15%.
  • Germany’s 10-year yield dipped three basis points to -0.50%.

Commodities

  • West Texas Intermediate crude rose 0.4% to $53.51 a barrel.
  • Gold strengthened 0.1% to $1,856.63 an ounce.
Opening Bell: Equities Stall Despite Fed Easing Commitment; Gold, Dollar Rise
 

Related Articles

Ryan Anderson
PREVIEW: RBNZ Rate Decision By Ryan Anderson - Nov 23, 2021

RBNZ is expected to hike the OCR for a second consecutive meeting by 25bps to 0.75% OIS fully price in a hike and 19 of 20 analysts surveyed expect a 25bps increase, while the...

Opening Bell: Equities Stall Despite Fed Easing Commitment; Gold, Dollar Rise

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
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email