- US markets rise in the previous recovering from Monday’s fall.
- Treasury bond yields remain stable.
- The dollar accelerates the fall in the market due to a better tone.
Wall Street futures are in positive territory on Tuesday, recovering from Monday’s drop. In Europe the markets show mixed results. The dollar accelerates the downward correction.
Futures up, dollar down
The S&P fell 0.69% on Monday and in Tuesday’s preview climbs 0.72%. The futures of nasdaq advance 0.75% and those of the Dow Jones 0.56%. In Europe markets operate mixed.
Despite the rises on Wall Street, the climate of general caution still prevails. The focus for these hours is on the energy crisis in Europe. High temperatures and the expectation that Russia will not resume gas shipments continue to push energy prices up.
In the United Kingdom, the race for the succession of Boris Johnson, which was reduced to four contenders (Mordaunt, Truss, Badenoch and Sunak). The market sees Truss’s candidacy as risky, due to his proposals for tax cuts and changes in the Bank of England. In Italy, Wednesday will be the key day with the vote in Parliament for the continuity or not of Mario Draghi.
In this context, the European Central Bank is preparing to raise interest rates for the first time in years on Thursday. It also plans to announce its “anti-fragmentation” tool, which is not ready yet. Speculation about the possibility of a rise of 50 basis points, instead of 25, sent the euro higher. The common currency is among the best performers on Tuesday.
EUR/USD trades in the 1.0250 zone, far from parity. It was also strongly boosted by dollar weakness. For the third consecutive day the dollar falls. The DXY it is below 106.50, at the lowest in almost two weeks. The correction gained momentum with the recovery in equity markets and stability in Treasury bond yields.
A factor that contributed to the correction of the dollar is the reduction in the expectation of a hike of 100 basis points by the Federal Reserve next week. A 75-point move is favoured, to deal with the highest inflation in 40 years.
Manzana made headlines Tuesday amid reports the company is slowing job hiring and spending plans, reflecting fears of a recession in coming months. In the premarket Apple rises 0.3%. IBM shares fell more than 5% after reporting that it will close operations in Russia and saying that the rise in the dollar weighed on its results. Twitter (-0.23%) and Elon Musk will face each other in court for the incomplete acquisition.
These days corporate results are going to change from large banks to other companies. Today is the turn, among other companies from Johnson & Johnson, Halliburton, Lockheed Martin, Hasbro, Novartis AG and Netflix.
Commodities slightly up
The better climate in the markets supports the raw Materials, but the uploads are being limited. The positive for gold is that it remains above $1700, while silver has yet to return above $19.00. Oil prices fell more than 1%, paring a small part of Monday’s significant rise.
Cryptocurrencies are on the rise. The Bitcoin got close to $23,000, but then gave up the profits and is trying to get back over $22,000. ethereum it jumped on Monday, peaked at $1,631 on Tuesday, and then pulled back to the $1,500 area, where it found support.
Technical levels
Source: Fx Street
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