Markets have kicked off the week with minor gains after a down week. Uncertainty about US inflation, China’s tech crackdown and worries about covid and infrastructure. The dollar is gaining ground across the board. Cryptos are on the back foot.
Cautious mood: S&P 500 futures are little changed after stocks eroded previous gains last week. Concerns about US inflation remain prevalent after Friday’s relatively high producer price figures and ahead of Tuesday’s all-important release of consumer prices.
Federal Reserve officials are now officially in their “blackout” mode ahead of next week’s decision. Analysts expect the Fed to refrain from tapering their bond-buying scheme next week but to make a move later in the year. Apart from inflation figures, retail sales and consumer sentiment statistics are eyed.
US infrastructure spending plans are up in the air as Democrats are divided on raising corporate taxes and as conservative Democrat Senator Joe Manchin rejects the top line of the $3.5 trillion price tag.
Techlash: Chinese authorities are reportedly considering breaking up Alipay, one of the largest payment companies. It comes on the heels of Beijing’s other efforts to curb the power of large tech companies and cools sentiment. Reports of new COVID-19 clusters also add to the damp mood.
German elections: Center-left candidate Olaf Scholz solidified his position as the leader to inherit Angela Merkel after the third televised debate. He refrained from ruling out a coalition with the radical left, and that is marginally weighing on EUR/USD, which is trading under 1.18.
Last week, the European Central Bank announced the slowing down of its bond-buying scheme but insisted it is only a “recalibration” and not a material change.
GBP/USD is hovering above 1.38 as UK Prime Minister Boris Johnson is set to announce changes to the country’s covid policy and as cases remain elevated.
Gold is trading under $1,800 as US 10-year Treasury yields hold up around 1.33%. Oil is trading at around $70. Goldman Sachs said the global oil market is set to “rally significantly”
Cryptocurrencies: Bitcoin is trading under $44,000 Etehreum below $3,300 and ADA below $2.50. Digital assets are on the back foot once again, with some citing Korean regulation as the catalyst. Cryptos suffered a “flash-crash” last week as El Salvador made Bitcoin a legal tender.