Stock Markets Strengthen Slowly, China’s Economy to Get Support from Authorities, Amazon Dollar pullback from 20-year high and Chinese authorities’ pledge to support economic growth on Friday gave battered stock markets a respite, though Wall Street remains poised to open lower after retail giant’s weak earnings Amazon Trade (NASDAQ:AMZN).
As of Thursday April 28, the EUR/USD is down 0.20% to 1.0534 with support near 1.0750. Stochastic lines are in the oversold zone and are directed downwards, which indicates that further decline in the instrument will be limited in the short term.
The DXY dollar index is growing by 0.29% and is trading at the level of 103.25.
After the Bank of Japan said it was ready to buy an unlimited number of bonds every session if needed, the dollar soared to record highs against the yen in over 20 years on Thursday. Despite the tightening of the Fed’s policy and rising inflation, the Bank of Japan maintained its position, leaving zero rates, thus showing that the global rise in inflation does not concern Japan.
After these actions, the Japanese yen fell 1.3% to 129.70 yen per dollar and hit a new low since 2002, approaching the “psychological barrier” of 130.00. At the same time, the dollar rose in April to 6.6%, reaching its highest level since the end of 2016.
The 10-year US Treasury yield rose 48 bp in April alone. to 2.83%, opening up a gap between Japanese debt. This lifted the dollar index to a five-year high of 103.5, if the mark of 103.8 is exceeded, then a 20-year high will be reached.
At the same time, the euro fell to a five-year low, falling by 5%, which only exacerbated the difficulties in the macroeconomics of Europe, as the cost of energy in dollars increased and the cost of natural gas rose sharply after the cessation of supplies from Russia to Bulgaria and Poland.
European government bond yields also rose as eurozone inflation peaked at 7.5% in April on the back of better-than-expected European publications.
As of today, the European Central Bank has a 90 basis point rate hike target by the end of the year, with the euro up 0.7% to $1.0568.
Global equities continued into April with a 5.8% decline, and while Asian and European equities rose, Nasdaq and S&P 500 futures were down 1% and 0.7%, respectively, at 1020 GMT.
Shares of the giant Amazon fell by 12.5%, showing the maximum decline in the last 7 years. Rivian contributed to this, probably due to a temporary decrease in buyers’ interest in electric cars. Prior to today’s pullback, Rivian has made significant profits for Amazon, and analysts expect further gains in both stock prices.
The dollar index showed an upward trend to the highest level in the last seven years, but fell by 0.6% on Friday, interrupting its four-day ascent. Due to this pause, the yen and the dollar were able to recover slightly from their record lows.
Some of the experts believe that perhaps the peak of the dollar has already been reached and further growth probably will not happen by the end of the year.
The MSCI global equity index rose 0.5%, while the pan-European benchmark rose 0.8%.
The Chinese government has announced its intention to support the economy by easing its policies in order to achieve economic goals for 2022. This allowed the shares of technology companies to rise to 15% in price, the first were electronic trading platforms JD, Meituan and Alibaba.
Elsewhere, the yen, which broke through a key psychological level of 130 yen on Thursday, retraced 0.75% to hit 129.9.
The Chinese yuan, despite record 28-year lows, also strengthened.
“There’s been a lot of dollar pricing done and there’s a lot of catching up to do for the laggards,” noted Mizuho analyst Asher.
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