Thursday market minute

  • Global stocks fall as talks shrink, cryptocurrency baffles risk sentiment ahead of weekly jobless claims.
  • The minutes of the Fed’s April meeting hinted at short-term talks to reduce monthly bond purchases, which could be the first step in normalizing interest rate policy.
  • Bitcoin is stabilizing near the $ 39,000 mark after yesterday’s 30% drop / rally, which could have diverted more than $ 10 billion from global investor accounts.
  • Yields on 10-year benchmark notes hold at 1.656% as dollar index slips slightly lower to 90.107
  • CDC data shows that 125.5 million Americans have now been fully immunized against the coronavirus, with approximately 277.3 million doses administered as of Wednesday.
  • U.S. equity futures suggest a softer open on Wall Street ahead of Kohl’s first quarter results and weekly jobless claims data at 8:30 a.m. Eastern time.

U.S. equity futures indicate a mixed openness on Wall Street on Thursday as investors react to a potential shift in the Federal Reserve’s low rate policy and wider volatility linked to yesterday’s crash in markets. cryptocurrency.

Weekly jobless claims fell to a new post-pandemic low of 444,000, the BLS said, although continuing claims edged up from 110,000 to 3.751 million.

The minutes of the Fed’s April interest rate meeting indicated that “a number” of members of the Open Markets Committee, which calibrates interest rate policy for the central bank, felt that it “might be appropriate at some point in the next meetings to start discussing a plan. to adjust the pace of asset purchases” if the economy were to continue its rapid recovery and inflation would continue to accelerate.

A change to the $ 120 billion in monthly asset purchases by the Fed – which market professionals refer to as “ tapering ” – would be the first step towards an increase in the Fed Funds rate, which currently sits at a low. record level between 0% and 0.25%.

“We think the Fed intends to be patient and keep rates lower for longer, but by the end of this year, the committee’s unanimous desire to keep rates low may dissipate and more. disagreements could spread in the public eye, ”said Chris Zaccarelli. , chief investment officer for Independent Advisor Alliance in Charlotte, North Carolina.

“In the meantime, cyclicals should have room for maneuver and the growth versus value debate will rage, while waiting for the Fed to change its collective opinion on rates,” he added.

The change in tone pushed US stocks lower yesterday afternoon and seeks to hold back the bulls ahead of Thursday’s session, even as bond markets – apparently the first asset class to respond to a decrease in buying – stayed on. relatively silent after a quick jump. following the release of the minutes last night.

Wednesday’s cryptocurrency crash, which saw bitcoin prices fall – and then rise – by 30% also sapped risk appetite as investors seek out spillover into traditional markets triggered by losses. estimated at 9.2 billion dollars following the digital carnage. currencies.

Bitcoin prices, which hit a four-month low of just under $ 30,000 yesterday, stabilized at the $ 39,000 level at the start of Thursday, but could be susceptible to another sharp drop in the coming days.

Meanwhile, futures suggest another weaker opening on Wall Street with contracts linked to the Dow Jones Industrial Average showing a drop in the opening bell of 105 points and those linked to the S&P 500 priced at a pullback of 6.5 points.

Futures on Nasdaq Composite envision a more modest 15 point gain as benchmark 10-year benchmark yields hold 1.656% following weekly jobless claims data.

Oil prices were also active, with crude falling for a third straight session amid a sharp rise of 1.3 million in domestic stocks, lingering demand concerns in Asia and the prospect of a breakthrough. in US negotiations with Iran, which could see its offer come back to world markets.

WTI futures for July delivery fell $ 1.03 to $ 62.32 a barrel while Brent contracts for the same month, the global benchmark, slipped $ 1.18 at $ 65.48 per barrel.

In Europe, strong profits and reopening bets were offset by the fastest reading of ex-factory inflation in Germany – the region’s largest economy – in nearly a decade, the Stoxx 500 falling 0.03% on the session and the UK FTSE 100 falling. 0.3% in London.

Overnight in Asia, the PBOC’s decision to keep its benchmark lending rate unchanged for the thirteenth consecutive month provided some support to regional markets, but the momentum of “ risk out of 225 closed 0.2% more in Tokyo thanks in part to the largest increase in exports since 2010.