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Daily wrap up 28 June 2021

28 Jun 2021 06:34 PM

Volatility has been low today as there has been little in the way of news to excite traders. European stock markets are broadly lower as concerns about the pandemic are doing the rounds. The World Health Organisation warned about the rising number of Covid-19 cases as the delta variant of the coronavirus is proving to be a problem in certain countries. In London, travel stocks like Ryanair and easyJet are offside, and so are hospitality stocks, such as JD Wetherspoon and Restaurant Group. Transport firms, National Express and FirstGroup are also incurring losses. These companies have arguably the most to lose should there be further delays to the full reopening of the UK economy.

The mood in the US is more optimistic as the S&P 500 and the NASDAQ 100 have set fresh record highs. Less than two weeks ago, US indices came under pressure after the Fed suggested they might lift rates twice in 2023, but since then dealers have absorbed that information and it seems to be factored into stocks. At the end of this week, the US non-farm payrolls report will give us an update on how well the US economy is progressing. The US central bank has sent out the message that rates will probably be hiked at some point in the next 24 months, so unless Friday’s jobs report is stellar, it is unlikely to trigger a major decline in equities.

The US dollar is flat today, following on from the declines it endured last week. Even though the greenback is off the highs that were posted in the wake of the Fed meeting, it is also firmly above the pre-Fed meeting levels. Traders will be paying close attention to the US jobs report as it is likely to be important from a direction point of view. Lately, gold has been rangebound. It appears to be bouncing between $1,770 and $1,790. The lack of volatility in the dollar is having a knock-on effect on the metal.

Oil is lower due to profit taking. The energy rose last week for the fifth consecutive week, largely driven by the recovery storey. Even though the energy posted a new 32 month high in the early hours, it has since turned lower. OPEC+ will meet later this week and there is talk the group will increase output from August. The group has been unwinding the deep production cuts that it imposed last year, so some dealers are banking profits ahead of the planned meeting.


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