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Daily Wrap Up 26 April 2022

26 Apr 2022 04:18 PM

US tech drags Europe lower

Earlier today we saw a reversal of yesterday’s fortunes as European stock markets recouped some of the ground that was lost yesterday. Buyers swooped in this morning, even though the wider narrative about soaring inflation, the possibility of higher rates, the war in Ukraine, and a cooling Chinese economy is still in the mix. The positive run did not last too long as the bearish moves on Wall Street wiped out the gains seen in Europe.

Last week, Jerome Powell, the head of the Federal Reserve, issued a very hawkish statement and that amplified the talk about a 50 basis points hike from next week’s Fed meeting. It appears the US central bank is very keen to ramp up the pace of tightening its policy, and that topic is likely to hang around until the meeting is out of the way. US equities are in red as it looks as if they are in for another volatile session. Yesterday the S&P 500 fell to a 10-day low, only to close higher on the session thanks to a tech rally, but today the tech sector is nosediving.

The US dollar’s dominance continues as it hit yet another two-year high, and in turn EUR/USD fell below the 1.0700 mark, its lowest level in 25 months. The fresh multi-year lows in the currency pair is a reflection of the booming greenback but also the weaker euro. The single currency is lower versus, the yen, the Australian dollar, and the Swiss franc as the ongoing conflict in Ukraine and the fears surrounding possible sanctions on Russia are holding back the euro.

Most industrial metals are still fragile after the large declines seen yesterday. Silver, copper and platinum are a touch lower today as demand worries linger. Shanghai is in lockdown due to the coronavirus, and that is feeding fears about lower growth in China. The second largest economy in the world is a major importer of commodities, so its appetite for minerals is being called into question. Gold is marginally higher as bargain hunters have stepped in. The yellow metal is benefiting from the risk-off mood in the US as dealers are swapping stocks for the commodity. WTI is up over 1% as it has bounced back from yesterday’s painful fall, but the fact it has only mustered a small recovery indicates the relative weakness in the market.

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