Wall Street bounces back on renewed optimism
European markets opened today's session on an upward trajectory, continuing yesterday's session in which they were more optimistic, rising significantly. Also, on a more bullish tone started the day the North American futures.
The markets are waiting for new references, both at the macro level and at the business level. Today, investors are waiting for the publication of earnings from companies such as Johnson & Johnson or Texas Instruments in the US.
If the base scenario of the economic recovery is maintained, it would be the key that gives confidence to investments and could stop the stock markets' corrective movement. Traders could turn towards safe-haven assets such as the American treasury bonds. However, some moments of uncertainty are expected, which can originate from the new wave of infections with the Delta variant. In the US, it already accounts for 83% of new cases.
For now, and if the extension of this variant remains at current levels, it is unlikely that it will have a high impact on recovery as long as vaccination continues at the current rate. Moreover, markets hope that the new cases won't lead to further restrictions on mobility, which could challenge the recovery thesis, even though it may be slower than initially expected.
In this sense, the key for the week will be in the July PMIs that will be published on Friday. The reading will allow investors to determine if the market is exaggerating the fear of a cyclical slowdown.
In the foreign exchange market, the dollar continued its upward path, supported by the rebound in the yields of the US Treasury bonds with the 10-year bond above 1.20%.
This is reflected in a particular way in the price of the USD /JPY, which topped 110.00, finding the first resistance at 110.33. Still, it is far from the most important one located at 110.70. If exceeded, it would give the pair an upward impulse.
Oil has continued slightly lower today after an unexpected increase in weekly crude stocks published by API. A decrease of -4.1 barrels was expected, and the figure showed an increase of 0.8 barrels. Together with the uncertainty of a potential decrease in global demand, this data has pressured the price of crude oil. At the beginning of today's session is set to recover 1%, marking a technical correction or profit-taking.
Technically, it is trading above the previous support zone at $67.24 per barrel, which is now acting as resistance. To resume the bullish momentum, it would need to make a daily close above this level. The daily RSI that starts from the oversold zone could hint to a recovery.
Sources: Bloomberg.com, reuters.com
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