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News & Analysis

Week Ahead: Equities slide, US Dollar rallies and Reddit raids silver?

1 February 2021

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By Lachlan Meakin

Wall Street suffered a 2% sell off on Friday capping off a poor week for global equity markets. All major European, Asian and US Indices finished decidedly in the red as stimulus euphoria post the new US administrations inauguration seems to have faded.

Equity Markets

US Indices posted their worst week since October with the Dow sliding over 3% and the tech heavy NASDAQ down nearly 3.5%

Australian, European and Asian markets also had steep declines while investors are impatient for hard evidence that COVID vaccines are working and that the promised U.S. stimulus will actually be passed.

A very busy week ahead in economic news with the RBA rates decision on Tuesday, NZ and Canadian Employment and the all important monthly non-farm payrolls out of the US on Friday.

There is also a busy week in US earnings with Tech behemoths Alphabet (GOOGL) and Amazon(AMZN) reporting.


Source: https://www.ii.co.uk

FX Markets

With equity markets in risk off mode last week the US dollar seems to have regained its safe haven status somewhat, with the US Dollar index rallying around 0.3%.

Friday sees the monthly non-farm employment report out of the US. This is an extremely important figure to gauge how the US economy is improving, volatility over the figure is to be expected.

The risk on AUD dropped almost 1% against the greenback closing below recent weekly support levels. AUD traders will be eagerly awaiting the RBA rate statement on Tuesday to give clues of future rate moves and AUD direction.


Source: GO MT4

Commodities

Oil

Despite a much larger draw on Crude inventories than was expected last week, US crude continues to whipsaw in a tight range. We again saw crude bounce off both support and resistance and finish flat for the week. Wednesday night sees the latest crude inventories report released and with non-farm payrolls on Friday we could see crude break this range one way or another.


Source: GO MT4

Silver

The Precious metal to watch this week is silver. With an impressive 7% rally last week despite dollar strength completely outperforming it’s big brother Gold.

The trader bro’s of Reddit, infamous for the recent parabolic rise in Gamestop have reportedly set their sights on silver. Whether they can move a market this size to any great extent remains to be seen.


Source: GO MT4

Lachlan Meakin

Tuesday, 02 February 2021 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0 6.777 0.039 0.024 0.171 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 0 0 0


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