FXTM information and reviews
OctaFX information and reviews
XM information and reviews
FXCC information and reviews
FxPro information and reviews
HFM information and reviews

Markets rise, but leaders are changing

25 February 2021

The buying of risky assets has intensified again in the markets. The rally in commodity currencies and the pound is being stretched even further. As confirmation of buyers’ strength, the Dow Jones30 has added 1.35%, and futures are now above 32,000. The Nasdaq100 found support after failing under the 50-day average earlier in the week, while the S&P500 reversed upward after touching its 50-DMA.

Thus, the markets are dominated by bets that the world economy is returning to normal. In this race, the former leaders, the so-called FAANG and companies like Tesla look a little tired after last year’s acceleration. Traditional value stocks and commodity sectors are now getting a chance to narrow the gap with high-tech companies.

Yesterday, the Nasdaq100 returned to growth on Powell’s assurances that rising US long-term bond yields are a sign of optimism about the economy rather than fear of inflation. But it is worth considering this move from another angle.

Increasing yields are bad for growth companies, which raise capital to finance advancements and are far from the phase where they will return it to shareholders. Also, higher interest rates boost the denominator in terms of companies’ projected earnings. That is, it makes them more overvalued in real terms than when rates are lower.

This is why higher interest rates are putting pressure on growth stocks. Yesterday we saw a simultaneous rise in long-term government bond yields and a rebound in the Nasdaq index. However, we can hardly draw far-reaching conclusions from this.

Further development of rising government bond yields will keep the market focus on value equities and commodities. This trend appeared in full force in February and could remain with us for the coming months or even years.

Exactly one month since the end of January, Apple and Tesla shares, proxies of the high-tech boom in the stock market, have been pulling the indices down rather than pushing them up. Meanwhile, commodity assets are skyrocketing, and risk-sensitive currencies (AUD, CAD, GBP) are renewing 2-3 year highs. These currencies against the dollar have approached critical round levels, with AUDUSD approaching 0.8000, USDCAD testing 1.2500 and GBPUSD at 1.4200, finding itself near 2018 peaks, back to pre-Brexit levels.

Nevertheless, this does not at all rule out short-term pullbacks within the general trend. Commodities could fall into short-term profit-taking at the close of February, as could several currencies, which could require a recovering correction for further gains.


Share: Tweet this or Share on Facebook


XAU/USD retreats from multi-month top amid modest USD recovery, ahead of US GDP
XAU/USD retreats from multi-month top amid modest USD recovery, ahead of US GDP

Gold price pulls away from a fresh multi-month top amid a modest US Dollar strength. Bets for smaller rate hikes by Federal Reserve, recession fears should help limit losses...

26 Jan 2023

Microsoft: Still Trapped Within Descending Channel
Microsoft: Still Trapped Within Descending Channel

Microsoft Corp., an American multinational technology conglomerate currently ranked the third largest company by market capitalization ($1.728T) which actively engages...

24 Jan 2023

Same story new week
Same story new week

Chinese New Year celebrations – many centres are closed in Asia. Treasuries sagged to end on a bearish week. USDIndex at 101.30 low as the market continued...

23 Jan 2023

EUR is stuck consolidating
EUR is stuck consolidating

EURUSD is going to consolidate. The current quote is 1.0810. In the nearest future the EUR might experience some local pressure because the weather in Europe has changed...

20 Jan 2023

EURGBP Fails To Break 0.89
EURGBP Fails To Break 0.89

In today’s European session, Germany’s final CPI rate for December registered 8.6% on an annual basis, in line with market expectations and the previous value...

18 Jan 2023

XAUUSD: Weekly Review 16-20 January 2023
XAUUSD: Weekly Review 16-20 January 2023

Gold jumped to start 2023 with strong gains, as the positive momentum from December carried over into the new year. Last year’s headwinds, particularly the strengthening...

17 Jan 2023

Editors' Picks

FXCM information and reviews
ActivTrades information and reviews
RoboForex information and reviews
MultiBank Group information and reviews
MultiBank Group
Libertex information and reviews
Vantage information and reviews

© 2006-2023 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.