Overnight on Wall Street: Wednesday 03 February 2021

Equity markets

US Equity markets soared last night with strong corporate earnings, stimulus bill progress and promising progress on US COVID vaccination rates.

European markets trailed along posting strong gains and Australian and Asian markets are looking to open solidly in the green.

• Dow Jones up 475 (1.57%)
• NASDAQ up 209 (1.56%)
• DAX up 213 (1.56%)
• FTSE up +50 (0.78%)

Source: Google Finance

Corporate earning in the US continued their impressive beats of analyst estimates with tech heavyweights Alphabet (GOOG) and Amazon (AMZN) handily beating expectations.

 Stimulus talks have begun between the Biden administration and Republican senators which has given investors hope that a deal will be struck in the coming weeks, while it is

Simulus

The Biden administration and Republican senators have met this week to negotiate the passing of the relief bill before the Senate. While it seems unlikely the full 1.9T will be passed reportedly good progress is indicating a still hefty stimulus will be passed in the coming weeks.

COVID-19

US vaccinations have picked up pace with the US administering shots at a faster daily rate than any country in the world.

An important milestone was also passed this week with more Americans have received at least one dose of a Covid-19 vaccine than have tested positive for the virus.

Source: Bloomberg

FX markets 

Yesterdays RBA rate statement gave no surprises with the target rate with the RBA reaffirming the 0.1% cash rate and 3 year bond target would remain.

There was an unexpected announcement that the RBA planned to extend it’s 6 month 100B bond buying QE that was due to expire in April. The program will be extended by another 20 weeks, with the RBA committing to another 100b in bond purchases.

This caused a sharp drop in the AUDUSD exchange rate pushing it briefly below the all important 50 day moving average. This average is now an important support level in the coming days for AUDUSD.

Source: GO MT4