Today market sentiment is shifting slightly due to lots of profit-taking among investors prompting a massive sell-off. Risky assets, which have been gaining for days in light of the so-called reflation trading trends, are correcting downward today, while the US dollar is rising in value. The reserve currency is supported by increasing yields on US Treasuries.
US stock indices will stay down today amid the broader market sell-off. All major indices are down, but the Nasdaq 100 is the biggest loser this week due to its heavy concentration of tech stocks. Tech performed extremely well at the height of the pandemic but has been largely neglected since the reflation trading trend began a few weeks ago.
Bitcoin and other cryptocurrencies, which benefited greatly from the risk-on rally, are also moving downward today.
Crude oil, too, is decreasing in value, in large part because of the appreciation of the US dollar, in which it is quoted. With a more expensive dollar and all conditions on the oil market unchanged, crude is bound to weaken. The Brent fell to $64.79, while the WTI dropped to $62.15 per barrel earlier today.
Meanwhile, stimulus is the hottest keyword in the United States today. The House of Representatives will be holding a vote on President Joe Biden’s proposed $1.9 trillion stimulus bill. Nevertheless, it is worth noting that an amendment by the Democratic Party which aimed to increase the minimum wage nationwide to $15 has failed to gather support in the Senate and will thus not be a part of the stimulus bill.
As for the economic calendar, today there are a number of reports of interest to investors. Japan started the day with better than anticipated retail sales in January, but disappointing housing starts.
France released an inflation rate report for February that was slightly better than the forecast. There is also a European Council Meeting today, though no major market-affecting statements are expected at present.
Switzerland published its Q4 GDP growth rate reports, which outperformed the forecasts.
Later today we expect several publications from the United States too. These include the PCE and core PCE readings for January and the Michigan consumer sentiment report for February, among others.
