Hello Traders, it’s Friday, January 6, 2022 and time for your daily market update. As you may have already noticed, U.S. stocks took a hit yesterday, bringing a halt to a rally in global stocks. This was due to a combination of factors, including positive American jobs data and the Federal Reserve’s announcement that it will not be cutting interest rates anytime soon.
On the other hand, China’s announcement that it will be reopening its mainland border with Hong Kong sent Asian-Pacific stock markets (excluding Japan) to a four-month high overnight. This news, along with China’s commitment to step up financing support for domestic consumption and key investment projects, as well as support for a stable real estate market, has given investors hope that once the COVID-19 infection waves pass, China’s economic motors will start firing again and help offset slowdowns in other parts of the world. As a result, the Hang Seng reached a six-month high.
However, the positive news from China was offset by the release of the minutes from the Federal Reserve’s December 13-14 meeting, which struck a hawkish note and indicated that the central bank is focused on reducing inflation. This has led market participants to closely watch tonight’s U.S. jobs report for December for signs of a tight labor market, as it could fuel bets that more rate hikes are on the horizon.
On Wall Street, the S&P 500 dropped 1.2%, the Dow Jones Industrial Average lost 1%, and the Nasdaq Composite dropped 1.5%.
In commodities, crude oil rebounded after posting the biggest two-day loss for the start of a year in three decades. Brent crude futures settled 1.1% higher at $78.69 a barrel, while U.S. West Texas Intermediate crude ended up 1.2% at $73.67 a barrel.
Gold futures finished lower yesterday, posting their first loss in five sessions, as traders booked profits following the metal’s rise to its highest price since June. Gold for February delivery fell $18.40, or 1%, to settle at $1,840.60/oz. Silver for March delivery shed 54 cents, or nearly 2.3%, to $23.424/oz.
In currency markets, the Dollar Index rose 0.90% to 105.15 as investors navigate between the Federal Reserve’s hawkish tone and the support for riskier currencies driven by China’s reopening. This helped push the yen down to 133.300 per dollar and cut wagers that Japan’s ultra-easy monetary policy will be finally tightened this year. The stronger Dollar also pushed the Euro down 0.8% to 1.05175.
In the world of cryptocurrencies, Bitcoin slipped 0.19% and is currently trading at $16,615. Ether remained at $1,255. Dogecoin rose 1.67% in Asia yesterday only to lose it all and close down 0.98% and is currently trading at $0.07211. Litecoin fell 1.86% in Asia yesterday but managed to recover unchanged and is currently at $75.24 in early Asia trading.
This market update was brought to you by Daniel Ang, a career commodity trader who stumbled into the field after accompanying a classmate to a job interview in 1985. With over 35 years of experience in the industry, including working as a gold dealer and futures trader at Standard Chartered Bank and founding Traders Academy International, Daniel brings a wealth of knowledge to our daily updates. Stay tuned for more insights from Daniel and the rest of our team. Happy trading!
