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XTB TRADEBEAT

Recovery in stocks faces a test; US yields rise once more

Summary:

  • Stocks sell into European close as recovery faces 1st real test
  • Rise in US yields could weigh on stocks again and also Gold
  • Technical overview of Gold 
  • GBP gains as BoE signals higher rates
  • Will crypto markets hit $1 trillion this year?

The strong bounce seen in stock indices on Tuesday faded somewhat during Wednesday’s session and the latter part of today’s European session has seen another push lower. Indices are currently finely balanced as traders look for signs as to whether the move higher will gain traction or whether there is more downside ahead.

Yields have gained a lot of coverage over the past week with the rise in fixed income returns seen of late widely attributed as a contributing factor to the stock market rout last Friday and this Monday. Today’s session has seen the yield on US Treasuries rise back near their highest level in 4 years and this could spell more bad news for stocks and possibly also weigh on the Gold price.

A technical overview of Gold can be found here.   

In the FX space its been a busy day for GBP traders with the Pound surging higher after some hawkish comments from the BoE as they announced that rates would be kept on hold. The committee voted unanimously (9-0) to keep the overnight rate at 0.5% but a remark in the accompanying statement that the expected future rate of interest hikes will be faster than thought back in November sent GBP soaring. These gains have been pared somewhat into the European close and it will be interesting to see where GBP pairs end today as a signal of the next move. 

While the whole cryptocurrency block erased a considerable amount of its capitalization from the peak reached at the beginning of the past month, there are fresh calls heralding that total market capitalization could cross outstanding $1 trillion as soon as this year. Some experts told CNBC that cryptocurrencies could go on a bull run greater than last year passing the trillion-dollar mark in terms of their joint value.

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