Overnight on Wall Street: Tuesday 13 April 2021

Equity markets

US Equity markets took a breather overnight with all major indexes drifting modestly lower after the S&P 500 and Dow logged fresh record highs last week.

•         Dow Jones down 55 (0.16%)
•         NASDAQ down 50 (0.36%)
•         S&P 500 down 1 (0.02%)
•         Russell 2000 down 10 (0.43%)

The rotation from growth to value stocks has paused in April, whilst old economy financial and energy stocks outperformed in Q1 2021, to date in April growth and tech stocks have led the way. Tesla stock was up more than 3% after scoring an analyst upgrade last night.

Fed chairman Jerome Powell was interviewed on 60 Minutes overnight and underlined the Feds commitment to its current easy money policy.

“I think it’s highly unlikely that we would raise rates anything like this year,” he said. “I’m in a position to guarantee that the Fed will do everything we can to support the economy for as long as it takes to complete the recovery.”

Powell also stated that “some asset prices are elevated by some historical metrics” referring to record stock prices, contributing to the sell off in the market.

FX markets 

US Dollar

On Fed chairman Powell’s comments and a stabilising in 10-year bond rates, the US Dollar index dipped slightly, continuing its recent downtrend.

FX traders will be watching the US CPI figures released tonight to gauge how the Feds easy money policy is affecting inflation levels with a 0.5% increase expected to be reported for March.