Overnight on Wall Street: Wednesday 21 April 2021

Equity markets

US Equity markets slumped last night for a second straight day as the S&P 500 had its worst day in a month after last week’s record highs.

Small caps were the worst performing stocks with optimism fading in the re-opening of the world economy on an increase of global COVID being reported.

•         Dow Jones down 256 (0.75%)
•         NASDAQ down 128 (0.92%)
•         S&P 500 down 28 (0.68%)
•         Russell 2000 down 43 (1.96%)

Netflix (NFLX) reported first-quarter subscriber growth that came in well below expectations, with the stock sinking around 10% in after market trading.

Good results from Johnson and Johnson (JNJ) and Proctor and Gamble (PG), two companies that have benefited from the pandemic, drove those stocks to a higher finish but failed to buoy the overall market.

Economic announcements

Due to the scheduled Federal Reserve meeting on the 28th of April, the Fed is in a blackout period so US economic news will be sparse this week.

Today we do have Australian retail sales where an increase of 1% is expected for March and tonight we have the Bank of Canada Monetary policy report where the Central Bank is widely expected to start winding back its QE bond buying program.

With lockdowns in full effect in Canada and slow vaccination rates, the BOC is not expected to deliver any hawkish surprises in tonight’s statement.

FX markets 

US Dollar

Despite a drop in 10 year bond yields overnight the US Dollar index found support on its 100 day moving average and rallying strongly.

The Japanese Yen was the only major currency to outperform the greenback as it is highly positive correlation with bond yields continues.

Australian Dollar

AUD again tested the upper limit of the 0.76 – 0.78 USD range it has traded in for the majority of this year. AUDUSD found heavy selling around the 0.78 resistance area and an early session rally reversed, leading to a steep decline for the session.