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January 13, 2021

Traders rebuilding risk appetite? Platinum: +2.63%

In quiet news flow, impeachment leads headlines

In quiet news flow, impeachment leads headlines

During the session on Tuesday, there was very little in the way of economic news from an announcement standpoint, so impeachment headlines ended up being one of the biggest movers. US House Republican leaders have decided not to lobby their members against voting to impeach President Trump, although it should be noted that in order to impeach a president, the House of Representatives, and the Senate both have to decide to do so. In other words, it is probably simply just an exercise in futility to worry about such things, because quite frankly his term ends next week, so the entire thing is essentially political grandstanding.

Nonetheless, it is very difficult to imagine that people would have taken this in their stride, but it has not had a major influence in financial markets as of yet. However, what could still cause volatility in the markets might be the reaction of the 73 million Americans who have voted for the current president.

Earnings season in focus

Earnings season in focus

On Tuesday, Wall Street inched higher due to the beginning of earnings season with most American traders and investors expecting to see a rebound. General Motors shares jumped 6.4% after launching an electric delivery vehicle business, which of course is right in line with a lot of the “EV trade”, a major theme of 2021 and a darling of Wall Street. The ride-sharing company Uber jump 7% to touch an all-time high after it expanded its electric vehicle and hybrid ride option, driving investors to believe that this company could drive targeted customers to its service over some of its rivals.

Langfang locked down amid another coronavirus breakout

Langfang locked down amid another coronavirus breakout

Langfang, a city just outside of Beijing in China, went into lockdown on Tuesday as a new slew of coronavirus infections have raised worries about a second wave of the Covid-19 outbreak in the nation. The markets, of course, have not reacted directly to this, but if it does start to get out of control people will start to worry about risk appetite in general, due to the fact that China is such a huge portion of the global economy, and of course one of the biggest markets for international corporations. While not purely actionable information yet, it is most certainly something to pay attention to going into 2021.

US dollar selling returns

US dollar selling returns

Over the last week or so, we have seen a significant amount of US dollar buying in the currency markets. Meanwhile, the 10-year yields turned around during the middle of the session on Tuesday, which has relieved some of the buying pressure on the greenback that caused major issues in multiple risk assets. As the dollar seems to be in a secular decline, it appears that market participants are starting to look at the overall stimulus measures taken by the United States government for the longer-term. This has been offering plenty of opportunities to short the greenback, thereby driving money into commodities overall.

Global Equity Markets

Global Equity Markets

Stock markets were quiet overall around the world as a lack of news flow was a welcome respite for those who have been dealing with volatility. The biggest loser for the day was the FTSE 100, losing 48 basis points. However, the DAX, CAC, and Nikkei 225 were all within 10 basis points of their opening prices, while at midday in the United States the S&P 500 was up roughly ¼ of a per cent.

Index Change
FTSE100

FTSE100

-0.48

DAX

DAX

0.04

CAC40

CAC40

-0.05

Nikkei 225

Nikkei 225

0.09

S&P 500

S&P 500

0.26

Currencies

Currencies

Currency traders were a little bit more optimistic, selling the dollar against all of the major currencies that we follow. The Euro was up ever so slightly, while the British pound gained 4/5 of a per cent, just as the Aussie dollar gained 4/10 of a per cent. The Japanese yen was slightly higher against the greenback during the session. In general, it was a rather subtle attempt at returning to the longer-term trends.

Index Change
EUR/USD

EUR/USD

0.0683

GBP/USD

GBP/USD

0.8765

USD/JPY

USD/JPY

-0.0384

AUD/USD

AUD/USD

0.4181

Commodities

Commodities

Commodity traders were a bit positive as well, as the only commodity that we follow that fell was gold, losing 36 basis points. Silver markets were up over half of a per cent, while Brent and copper were up over 1.6%. The big winner of the day was platinum, as it gained 2.63% midday, and looks likely to continue breaking out based upon the industrial usage in the “reflation scenario” that the world seems to be going through.

Index Change
Gold

Gold

-0.36

Silver

Silver

0.58

Brent

Brent

1.67

Platinum

Platinum

2.63

Copper

Copper

1.60

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