Market News

The dollar index dropped back to around 90 level as the Fed released its dovish signal. The greenback made a new low against those riskier currencies, like the Aussie, Sterling, Loonie and Kiwi. As Powell reiterated on Wednesday that the Fed would not adjust the easing policy until the US economy has clearly improved, the greenback turned weaker. While the safe-haven dollar slipped, sensitive sentiment changed to “risk-on” again.

The overall European stock markets were in red in early trading session. Global investors are still closely watching the latest moves in the Treasury yields after digesting all the market news and analysis. Analysts believe that the positive expectations in the market would drive “money” into the equities from the low-rate bonds. However, some are on the other hand struggling that the higher yields could prompt investors back to the bond markets, sparking selloff pressure of stocks.

Shares in Asia-Pacific were nearly all bearish on Thursday, following the risk-off sentiment overnight on Wall Street. All three major indexes of Wall Street dropped sharply on Wednesday, all over 2% loss. The Fed left its benchmark interest rate near zero and kept other policies unchanged, as widely expected, but traders felt like a bit negative towards about it. Some analysts believe that investors actually expected “more” from Fed and now the overall optimism in the market is faded out.

Overnight, all three major indexes of Wall Street were up, of which the Dow rose to a new closing high, the S&P 500 gained around 1.4%, and the Nasdaq jumped almost 2%. Shares in Asian markets generally closed up on Thursday, following the Wall Street record highs overnight. The European Stocks also climbed a bit in early trading session, reflecting bullish outlook of those investment markets.

The risk-on mode is quite clear as investment market is expecting the wins of Democrats in Georgia. Analysts generally believe that a Democrat-controlled Senate would benefit the economy overall, so that traders are betting on those riskier assets. The yield of the benchmark 10-year US Treasury climbed over 1%, the first time since the global pandemic started in the March of last year.

Obviously, investors are betting on the strong fiscal and continuous monetary support from the US while all the uncertainties around have been lowered, pushing the dollar index down to 90 level below.

In the FX market, Sterling jumped to 1.35 level against dollar as investors bet on the Brexit deal, that can avoid a market chaos next year of the UK’s economy. The euro also strengthened to 1.22 level. On the other hand, the safe-haven dollar is weakened due to the general bullish outlook of the global economy.

On Monday, Asian stock markets are generally bullish cautiously, following a mixed trade last Friday in Wall Street. Investors are now digesting those positive news of vaccine, boosting the risk appetite of the financial market worldwide. The approval of Pfizer Inc and BioNTech’s Covid-19 vaccine in the US sparked optimism of a faster economic recovery.