Global stocks tanked on Monday as fears of the Delta virus spread globally. In the United States, the Dow Jones shed more than 800 points while the S&P 500 and Nasdaq 100 indices declined by more than 1%. Similarly, in Europe, the DAX, FTSE 100, and Stoxx 50 indices declined by more than 1%. Things turned around in the futures market, where the leading American indices rose by more than 0.50%. The weakness came as more countries like Thailand, UK, the US, and Australia reported more Covid cases and lockdown measures.
US futures rose after the relatively strong quarterly results from some of the biggest companies. On Monday, AutoNation said that its sales of new and used vehicles rose by 42% and 37% in the second quarter. The average cost of a car rose to $38,088 as supply shortages spread. Its revenue rose to more than $6.98 billion while net income rose to a record $4.83. Meanwhile, IBM reported revenue of $18.75 billion driven by its cloud and software business. Its cloud business rose by 13%, which is a slower rate than other comparable companies like Microsoft and Amazon. Its cloud revenue rose to $7 billion. The earning season will continue today when key companies like Halliburton, KeyCorp, and Philip Morris are expected to publish.
The Japanese yen declined against the US dollar after weak Japan inflation data. According to the country’s statistics agency, headline inflation rose by 0.3% MoM in June. This led to an annualised increase of 0.2%. The core CPI, which is BOJ’s favourite metric, rose by 0.2%. These numbers show that the Japanese economy is still struggling with low inflation. In other countries like the US and UK consumer prices rose by 5.4% and 2.5% in June. Later today, the key numbers to watch will be the Eurozone current account, US housing starts, and Russian retail sales numbers.
EURUSD
The EURUSD pair remained in a tight range as global markets retreated. The pair is trading at 1.1797, where it has been in the past few days. The four-hour chart has formed a falling wedge pattern and is slightly below the 25-day moving average. It is also along the middle line of the Bollinger Bands. Therefore, the pair will likely remain in this range today.
NDX100
The Nasdaq 100 index declined sharply on Monday. It moved to a low of $14,450, which was the lowest level since July 1. It then rebounded to the current level at $14,647. On the hourly chart, the index has moved above the 25-day moving average while oscillators have risen. It is also approaching the next key resistance at $14,717. Therefore, the pair will likely keep rising as bulls target this resistance level. However, there is also a possibility that it will retreat since this bounce could be a part of a dead cat bounce.
JPN225
The Nikkei 225 index declined sharply yesterday. It fell to a multi-month low of ¥27,060 and then rebounded to the current ¥27,587. The pair’s Relative Strength Index also moved from the oversold level of 25 to 40. It is still below the Ichimoku cloud while the MACD has also risen. The index will likely keep rising as bulls target the next key resistance at ¥27,800.
