It’s no longer a surprise to see tech stocks moving higher and disconnecting from other sectors. After all, lives changed and we had to adapt to new realities ever since the Covid-19 pandemic began. This was the case yesterday as global equities soared while the Nasdaq was in a completely different world.
The tech-oriented index moved towards 14500, a new all-time high, and held there overnight as buying pressure remained buoyant. On the other hand, the Dow dipped from its Friday close while the S&P remained relatively flat but holding steady in its new range. The same cannot be said about European equities which are struggling with the potential effect of a new Covid-19 variant labeled Delta. This was evident by the very modest gains of 0.02% for the MSCI All Country World Index which is heavier in US exposure.
Following the hawkish shift of the Fed, all eyes will be on Friday’s employment report out of the US. Improving numbers could support higher rates during 2022 and, according to analysts, traders could be exploring upcoming impactful news to assess the likelihood of the Fed’s future actions.
Across other markets, volatility remains elevated with Crude Oil dipping over $2. According to analysts, the move is the result of potential profit-taking as the commodity itself has been relentless in its gains over the past few months. On the other hand, Gold continues to consolidate following a sharp drop of over $100 during mid-June. The ranging action will not last forever yet safety-linked assets are torn between a hawkish Fed and growing Covid-19 concerns alongside other global challenges.
Looking at currencies, the Dollar is off recent lows as the Dollar Swiss moves from the mid 0.9100s towards 0.9200 while the Euro trades close to the 1.1900 area. The Canadian Dollar is down against the Dollar and trades around the mid 1.2300s following a low close to 1.2250 seen over last week. The weakness is further fueled by a dip in Crude Oil.
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