TOPICS DISCUSSED IN THIS MARKET BRIEFING:
- LEuropean stock exchangespenalized by the renewed concern
- Wall Street fall after Fed minutes
- Graph of the day – Ethereum : a bearish divergence on RSI
European stock markets penalized by renewed concern
European stock exchanges fell at the start of the session Thursday while bond yields rose after the minutes of the December meeting of the US Federal Reserve, in a more “hawkish” tone than expected.
After posting new highs the day before, European markets are moving in the red in the wake of Wall Street indices, investors fearing that the Federal Reserve will react to rising inflation more restrictively than expected.
The prospect of an acceleration in the normalization of monetary policy in the United States continues to support US yields and by extension those in Europe.
The US 10-year is at its highest since April and its German equivalent has peaked since May 2019, at -0.043%.
Investors will also follow the publication of the first estimate of inflation in Germany and the United States, weekly jobless claims and the ISM activity index in services.
H2 – Wall Street falls after the Fed minutes
Wall Street ended lower Wednesday, weighed down by the minutes of the December meeting of US Federal Reserve policymakers indicating that the Fed may raise rates sooner than expected.
The institution announced on December 15 that it would end its bond purchases on the markets in March and paved the way for three rate hikes in 2022.
Members of the US Federal Reserve at their meeting last month estimated that the US job market was “very tight” and that the central bank may not only have to raise interest rates earlier than expected, but also reduce its balance sheet to control high inflation.
The members of the Fed have decided to accelerate the end of the support measures deployed by the American central bank to offset the impact of the coronavirus health crisis.
Technology stocks were particularly penalized. The technology segment of the S&P 500 posted the largest decline in the S&P 500.
As a result, the Dow Jones fell 1.07% to 36,407.11 points. The Nasdaq fell 3.34% and the S&P 500 fell 1.94%.
Othersupdates on financial market news
Oil prices move higher despite the Energy Information Agency’s announcement of an increase in gasoline inventories of more than 10 million barrels in the United States last week, the largest increase weekly since April 2020, when the consensus had forecast an increase of 1.8 million barrels.
Today’s economic calendar:
Find the entire economic calendar to know all the economic events to comer.
CHART OF THE DAY – Ethereum: bearish divergence on RSI
L‘Ethereumwent under the bar of 35$ 00 after the minutes of the last Federal Reserve meeting showed the Federal Reserve leaned for more aggressive political action, which sapped investor appetite for riskier assets.
Moreover, on this chart in monthly data, it is clear that the technical configuration is deteriorating. First, prices have validated a bearish divergence on RSI. The previous divergence on this unit of time dates back to 2018 and the market had fallen sharply behind.
In addition, the December candle is characterized by a bearish swallowing, which reinforces the risk of a future correction. Technically, this bearish structure argues for a market pullback towards the 50% Fibonacci retracement level.
First, the market should rebound to support around $ 3,250. However, in the event of an incursion below this level, we estimate that Ethereum may accelerate its fall towards $ 2,875 and then $ 2,500.
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