DJIA Record High As Markets Brush Aside EU Worries Over Astra Vaccine

Very good morning, folks. It is Tuesday, 16th of March. Hope everyone is doing well. As per usual, we're going to wrap up with the close on Wall Street, where we did see the S&P gain for a 5th straight trading session, led by utilities and real estate sectors. The S&P closed up about 0.65%. Uh, the Dow closed up about half a percent. Doesn't sound like a great deal of a percentage change, but it did mark then a 7th consecutive session that the Dow has moved now to the upside, and it was a record close for the Dow. Some fantastic trades from the guys late last night, particularly shout out to Mike Ivy, absolutely awesome Dow trade yesterday. So well done there. And then the NASDAQ was an outperformer as yields backed off their recent run higher, and the NASDAQ was up just over 1%. That pretty much handed over the baton to a positive tone in the Asia-Pacific session. Nothing really too much there major to speak of in that domestic region, so just generally higher going into this European session this morning. So looking at the charts here, you can see the, the NASDAQ in the center future already up another 100 ticks this morning, and similar price activity really between the NASDAQ and the S&P, which do have now a supportive floor. If I just kind of move this NASDAQ to here and the S&P down to here, you can see both have got Thursday's high as a supportive floor for price now going forward through, uh, the coming session. And so the NASDAQ now is already just punching up through that, um, R1 in the futures market, uh, and the S&P, you can see multiple tests that we had from Thursday and then also the overnight Asia-Pac session on Friday before the eventual break came at the reopening of Globex trade on Sunday night, and then we punched higher. And so at the moment, um, decent platform now for price, irrespective even if we do have a bit of a pullback, as a lot of the attention now starts to draw to the FOMC meeting, of course, we'll get on Wednesday. So still fairly bullish there. That means then European equities— the DAX up about 50 ticks this morning. That's locked in a bit of a near-term range for the moment, but is being dragged up in sympathy generally with some of that positivity. On the upside here in the futures, you've got that overnight Asia-Pac high that came in at around 14,528 to keep an eye on, which was also at around the highs that we were seeing on Friday afternoon's trade in the futures. So the DAX a little bit more range, whereas the US indices a bit further ahead of the pack, up at this kind of record territory for the time being. Otherwise, the key indicator still, because news flow overall won't take me long to get you up to speed because it's not a great deal going on. So still looking for yields for direction. And this is looking at the US 10-year chart. I still think this is probably the singular most important one to look at from a chart, but also reflective of the yield movement. And yesterday, the positive outcome that we saw in, say, the equity market came as the T-note obviously bounced off this quite important range low that we've been seeing. And, you know, on the daily, we discussed this before, before, this is particularly important that the price holds up here, um, at around this 132.28 level, because any breach of that could see a 4-point drop back down to levels then that we've not seen in the 10-year since 2019, October, and the beginning of 2020, before then the breakout on the pandemic. So at the moment, that level is holding up, as you can see here from these ellipses on the bottom side, and prices reversed, causing yields to back off, and then the dollar consequently to soften a little bit, which supported then euro at a key level yesterday, which we'll look at in a moment. But this morning, just as Europe's come in, um, we have fallen short then of breaking through what's a key technical area of the last week or so's trade. I've had this rectangle, this colored one in the 10-year, marked up for a couple of sessions now. 1.3203, you can see here, previous resistance on the 8th, 9th, support turned then on the 9th. 10th. And then when we broke through, it came back up for the test on the classic before the push back down to the range low. And once again, that level holding up. So the yield at the moment, or the 10-year, is kind of fluctuating within this range here of about kind of 15 ticks or so. And so at the moment, when that moves lower, it kind of triggers then a little bit of subsequent dollar strength as yields just bump up a little bit. And we have what was generally a period of consolidation in tight trade for the Dixie overnight just seen the Dixie liven up a little bit as Europe's come into the market here. And consequently, that has led to a very mild weight coming into the, the major FX dollar pairs and also into the gold precious metals space. So as you can see here, moving over to the top left, Cable and EURUSD just printing fresh session lows. Definitely a greenback story. Both are down an equal amount of around 55 to 60 pips. Cable just coming down to that low point that we printed back on the 9th of the month, as that'd be 1.3833 in the futures. Looks quite heavy. Again, there's no news catalyst here, just a bit of dollar movement there, as you'll see, as I said, a bit of a move on the rejection of those highs in the 10-year yesterday. Then if dollar strength persists, a key area to look at in the EURUSD uh, futures pair is this area around 119.335. I had a test on there and we were watching that quite closely at the time but got rejected. So that managed to hold up, but it'd be interesting to see if we get a retest out of those levels because a break, you've then got the S1 on the downside just about 5 pips below, but then a deeper move could be quite interesting down to around 119.12. Under more persistent dollar strength. But a key level of support there to keep an eye on. All right, well, let's have a quick look at the news. What is actually going on? And as I said, not a great deal. In fact, a lot of the headlines is still being driven by a lot of vaccine information in regards to AstraZeneca. So I really wanted to get you up to speed on that and give some thoughts as Germany, France, Italy Spain, Ireland, Netherlands, and Portugal now have all joined the list of EU countries that have suspended the Astra vaccine. The European Medicine Agency— so you'll hear a lot about them in the coming days, otherwise abbreviated to the EMA— have said the benefits of the Astra vaccine continue to outweigh the risks. For context, the agency previously said the inoculations should continue while the clotting is investigated. This is to do with blood clotting and the reason for the suspension in the first place. And for context, only 30 people have had issues out of the 5 million vaccinated. So again, as far as the, the company is concerned, what AstraZeneca have said already is that that is not unusual as to what a normal status quo number would be for blood clots irrespective of them having received the vaccine. Now the EMA safety committee is scheduled to further review the information information today. So that is an event I would mark down in your calendar in case we see any breaking comments. My understanding is that that meeting is happening, commencing at 11 o'clock GMT, so late morning. And they've also called an extraordinary meeting to take place on Thursday to take any further actions if needed. So might be that we don't hear too much today, that it waits then for a more formalised announcement on Thursday. Meanwhile, EU health ministers also due to hold a video conference call today on the situation. where this is likely to dominate proceedings for their discussions. Um, at present, what I would say in summary to a lot of this news flow, um, because it is, um, causing quite a bit of attention, is that it's not really having any impact on markets. I mean, as I just described, equity markets in the case of the S&P and the Dow moving to record territory. So the market's not being fazed by this, and rightly so, because the likes of the EMA and the World Health Organization, the WHO, have come out and basically said that Look, it's fine. And a lot of people looking between or reading between the lines here and that obviously Europe have been dissatisfied with the likes of supply that's come specifically from the AstraZeneca drug for the EU. There's a lot of background political nuance to then the relationship at the moment post-Brexit where there's remaining lingering issues between the EU and Britain. So how much of this is being politicized at this point? Because I understand, I think, Australia's just taken a really big batch of Astra orders. So it's not as if other countries aren't still just following the, the advice of the medical authorities, which is still that the Astra drug is fine. Point being here is that unless the EMA, for example, come out and say something this week to the contrary of their current stance, which is that the vaccine is still fine to use at this point, then I don't think markets will assign much interest in these headlines despite the amount of media attention it's generating. If they do come out and say actually there's a meaningful risk here, whether it's blood clots or anything, and that actually puts into jeopardy the AstraZeneca vaccine, obviously that would be massive news, particularly for the likes of the UK, which in terms of its composition of vaccine orders it's heavily tilted to the Astra drug, but that in itself has been one of the key positive factors that's really helped accelerate their program. So I don't see that happening. It's a risk I think you should be aware of. Otherwise, as I said, very quiet, nothing else really for me to mention. So we're going to delve straight into the calendar and talk about really a couple of things. This morning, one of the major data points that we get is the German ZEW figure. If you've never heard of that before, quick summary, it's basically a soft sentiment-based survey where economists and analysts are asked about their perception of current economic conditions and what the future 6 months looks like. Last time we had ZEW, you can see here it came in at 71.2, and that was starkly above market expectations, and it was the highest reading that we've had here, as you can see, since September In terms of expectations for today, it is actually expected to go up to 74, so the best, the best number since that point there when we were printing in September, which was up at around 77.5. Generally speaking, optimism coming in about the future and the German economy in terms of its growth potential of the next 6 months, irrespective of generally the slow reopening that we've had with the rollovers of some of the stringency of the lockdown that that country's been observing. All in all, I don't really see this as too much of a market mover. I think definitely, as per what we just reviewed with the major pairs, it's a dollar-driven story, and that will remain the case with the US data coming this afternoon and the FOMC coming tomorrow. As far as the US data is concerned, then just going to look at retail sales. You do have retail sales, remember, with the clock change in the US. Don't be caught off guard, it's going to come 12:30 instead of the regular 1:30. So 12:30 for US retail sales, London time. And then 1:15 for US industrial production. Now both of these numbers are anticipated to be soft in January. For the retail sales report, as you can see here, we had a bit of a breakout in a positive fashion for the figure, which came in at 5.3% last month. That was way above expectations of 1.1%, and that came largely in part because of the initial previous stimulus checks hitting. And so purchasing of goods like electronics and appliances was particularly strong. As consumers just went out and spent a large proportion of that money. Now we are looking for that to fade a little bit then as that now fades out. Remember, the stimulus checks that were issued at weekend are not going to hit until this time next month when we're looking at retail sales numbers. So it's going to be kind of like January, February, perhaps March like this in that kind of pattern. So overall, very hard to really put too much weight in these types of data points given the fact that they're being driven by these one-time checks. The other thing to be aware of here is that when February winter storms will have deterred people from venturing out, with many left without power, probably add to downside potential risks. Industrial activity could also have been impacted by the bad weather and any associated disruptions. Remember, we had that kind of cold blast come and the deep freeze across much of the US. And how much has that impacted both retail sales and industrial production? We'll find out today. So all in all, for those reasons, then whenever there is these kind of one-time explanations of why data might be impacted, it's really hard to assign too much weight to the credibility of those numbers, and hence market reaction could be on the more tame side. Otherwise, for the calendar, they are really the major events. So, um, other than that, as I said, I'd still be keeping an eye on on the yields and for the knock-on subsequent impact that has then on the likes of the dollar. Generally then, as T-notes move down, i.e., higher yields, dollar appreciates. That weighs on the major pairs. Keep an eye on those downside levels as discussed in the euro and cable. Uh, gold as well. Gold is under its pivot in the futures market. Got a little further to run until we get down to around yesterday afternoon's lower levels. Uh, could be another area to, to keep an eye on. That is it though. Gonna wish you guys a good day. And if there's any questions at all, feel free to reach out to me in the Amplify Live Discord room. Just check out AmplifyLive.com if you're not part of the community. And I wish you a great day ahead. Thanks very much.