13.05.2022: Risky assets trying to close dismal week with gains (S&P500, USD, CAD, Bitcoin).
Wall Street is completing a week full of zigzag developments. The market could close today with some gains. Key stock indices were trading higher in the pre-market. The economic calendar is empty today, though some factors could dampen market optimism. For a start, let’s sum up yesterday’s session. The Nasdaq was the only index to regain its footing after weekly losses. It closed with a 0.1% uptick, though remaining on the bear market. The Dow Jones rebounded from its intraday lows, albeit closed 0.3% down. The S&P 500 logged a 0.1% downtick to close at 3,930. The pre-market today suggests a long-awaited trend reversal on Wall Street. The key indices grew 1.2%. The corridor for the index is seen between 3,940 and 4,020 today. Analysts say that the US stock market has not hit the bottom yet. The Nasdaq has tumbled almost 30% from its historic high. The S&P 500 has dropped more than 18%. The minor 2% is left so that the index enters the bear market. This year, over 7 trillion dollars have been withdrawn from the S&P 500, 3 trillion of which accounts for the high-tech sector. Stocks of Apple, Microsoft, Amazon, Alphabet, Meta, and Tesla are plumbing the depth of the downtrend. Netflix has slumped over 70%. The fear and greed barometer has climbed today to the average level of 37 from its last value at 32. Some analysts say that investors have accepted the dismal reality. Others warn that the bottom is yet to come. Among the best performers are stocks of GameShop and AMC with their 10% and 8% increase respectively. Rivian Automotive also rose nearly 18% following its financial quarterly report. Carvata first dropped to the lowest level in two years and closed with a 25% jump. Besides, Amazon and Meta stocks also recovered 1% yesterday. Today some stocks could trade with higher volatility. Twitter stocks fell 20% in the pre-market on the news that Elon Musk had suspended the deal to buy the social network. Meanwhile, the US dollar is advancing across the board. Its index reached the high of 104.70 as expected and settled there. The index is now making minor moves. The corridor for the index is seen between 104.30 and 105.00. The greenback has printed one-year highs. Nothing threatens its reign. The outlook is clearly bullish. On Thursday, the US Senate appointed 69-year-old Jerome Powell for a second term. Joe Biden nominated him in November, but Senators considered other candidates. Following his appointment, Jerome Powell warned on Thursday that the struggle against inflation could entail some economic problems, though it remains a priority. Powell cannot promise a soft landing for the economy because the Fed began the cycle of rate hikes to curb soaring inflation. So, his speech sets the stage for the US dollar’s rally. The USD/CAD declined to 1.3010 after a robust 5-day growth. The currency pair is expected to trade in the corridor between 1.2920 and 1.3200. The Canadian dollar is giving in to its stronger American rival. Domestic factors are of secondary importance. The Bank of Canada maintains its hawkish stance because the unemployment rate slipped to a record low of 5.2%. On the flip side, the annual inflation rate surged to 6.7% in March, the fastest rate in 31 years. Inflation is driven by high energy prices. Having risen 2%, Brent crude is drifting to 110 dollars a barrel. WTI approached 109 dollars. In fact, neither the economic stability nor the rally in the oil market can support the loonie. The crypto market is eventually enjoying a bounce. Bitcoin rebounded in the Asian session to trade at 30,500. It has regained nearly 8% of its losses. On Thursday, the crypto hit a 16-month low at 25,400. The price today looks awesome. Other tokens quickly followed suit. Ethereum gained 8%. Solana jumped 17.5%. Dogecoin appreciated 17%. Nevertheless, analysts warn that it is too early to speak about a steady uptrend. The collapse of two top stablecoins dealt a severe blow to the crypto market. A slump in recent days shook investors’ faith in digital assets. The US Fed obscures prospects of risky assets. The highest peak for bitcoin in the short term is seen at 32,800 in the best-case scenario. The realistic scenario is the area below 30,000 and a decline to 25,400.
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