Daily Wrap Up 29 April 2022

29 Apr 2022 04:48 PM

Europe outperforms, US dollar tumbles  

Stock markets in Europe are pushing higher even though tensions around Russia have ticked up. President Putin has threatened to hit back at countries that are assisting Ukraine. Gas supplies into the EU are being monitored as there are some worries the energy market could become weaponised. Yesterday, Germany dropped its objection to an EU wide embargo on Russian oil. That has led to speculation about a potential ban on oil form Russia. Even though those fears are in circulation, eurozone equities are up on the day, Germany’s DAX hit a one-week, Italian stocks are posting strong gains too. In the US, the bulls are in retreat as stocks have handed back some of the stellar gains that were recorded last night. US tech stocks have experienced a spike in volatility lately ahead of next week’s important Federal Reserve meeting, where it is widely believed that interest rates will be hiked by 0.5%.

Amazon shares are down over 10% due to the company’s disappointing quarterly results that were posted last night. The group recorded a three-month loss of $3.8 billion, but it took a $7.6 billion hit in relation to its electric vehicle business, Rivian. The online retailer is facing supply chain issues due to the war in Ukraine and the lockdown in Shanghai. E-commerce thrived amid the pandemic, but the boom has since faded. In the last few weeks, we have seen large scale declines in stocks that once seemed bullet proof, including Facebook’s owner, Meta Planforms, and Netflix. It says a lot about sentiment when even heavy hitters are under pressure.

The US dollar is nursing a large loss as yesterday’s poor GDP reading is still hanging over the currency. According to the advance growth report, the US economy shrank by 1.4% in the first three months of the year, and that prompted a sharp turnaround in the dollar, as prior to the announcement it registered a multi-year high. As a result of the move, EUR/USD and GBP/USD are rallying. Gold is up on the day thanks to the tumble in the dollar, but the metal is already comfortably off the session peak which suggests that optimism is already running a little low.

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