Powell in Congress, Lucid - SPAC Deal, Bitcoin Plunges - What's up in Markets

Powell in Congress, Lucid - SPAC Deal, Bitcoin Plunges - What's up in Markets

Investing.com  | Feb 23, 2021 11:45

Powell in Congress, Lucid - SPAC Deal, Bitcoin Plunges - What's up in Markets

By Geoffrey Smith 

Investing.com -- Federal Reserve Chairman Jerome Powell starts two days of Congressional testimony as fears about inflation push 30-year bond yields to new highs. Lucid Motors finally ties up its deal with Michael Klein’s SPAC Churchill Capital IV , Bitcoin and Ethereum plunge but sterling and U.K. stocks surge after Boris Johnson maps out a road out of lockdown. Here’s what you need to know in financial markets on Tuesday, February 23rd.

1. Jerome Powell and the great inflation scare

Federal Reserve chief Jerome Powell starts two days of testimony to Congress on the state of the economy, at a moment when concerns about inflation are triggering a heavy sell-off in long-dated bonds.

Powell’s appearance promises to be the highlight of the week for global markets, giving the clearest indication of whether the Fed will remain committed to letting the economy to run hot in order to quicken and complete the economic recovery from the pandemic.

The Fed’s repeated assurances that it will keep policy loose this year have been one of the factors behind the sharp run up in assets such as commodities, as well as other assets that are implicit bets on dollar devaluation.

2. Crypto sell-off gains pace

First and foremost among such dollar-devaluation bets have been cryptocurrencies, which are correcting sharply as investors take profits on what has been an extreme move over the last three months.  

Bitcoin prices fell another 13.6% overnight to $47,410 on the Bitfinex exchange. They’ve now fallen 20% from their peak two days ago, although they’re still up by more than two-third since the start of the year, a rally driven by a rapidly expanding range of ways to play the asset.

The sell-off was sparked over the weekend by a tweet from Tesla (NASDAQ:TSLA) CEO Elon Musk, who noted that prices for Bitcoin and Ethereum seemed “quite high” after their recent runups. Ethereum was down 19.5% overnight at $1,463.

3. Tech set to drive stocks lower again; Home Depot , Medtronic report

Tech stocks are set to drag U.S. markets lower for a second straight day when they open later, as concerns about a possible slowdown in money-printing by the Fed raises the incentive to take some profits on a rally that now stretches back years.

By 6:30 AM ET (1130 GMT), Dow Jones futures were down 60 points, or 0.2%, while S&P 500 futures were down 0.6%, but Nasdaq 100 futures were down a hefty 1.5%, extending losses of 2% posted on Monday.

Among stocks likely to be in focus are Tesla (NASDAQ:TSLA) and Churchill Capital IV (NYSE:CCIV), the SPAC which overnight formally announced the terms of its merger with Tesla rival Lucid Motors. Tesla lost 8.6% on Monday on the emergence of its first real U.S.-based challenger in the luxury electric vehicle segment.

Also under the microscope will be Home Depot (NYSE:HD), whose stock fell 1.5% in premarket trading after it said it couldn’t say whether 2021 will be as strong as 2020, when it rode a pandemic-driven boom for home improvement. Medical device maker Medtronic (NYSE:MDT) is also due to report before the open.

4. U.K. assets surge as Johnson outlines exit from lockdown

The pound hit its highest in a year against the euro and its highest since April 2018 against the dollar after Prime Minister Boris Johnson outlined what he called a “cautious and irreversible” path out of lockdown by July.

U.K. stocks also surged in response to Johnson’s TV address, given late on Monday. The FTSE 250, a midcap index that concentrates on domestic-focused stocks, rose nearly 1%, while the FTSE 100 also outperformed other European markets, which followed the general downward trajectory on Wall Street on Monday.

Johnson’s upbeat address overshadowed labor market data on Tuesday morning that showed unemployment reaching its highest in five years in December, along with another 114,000 contraction in employment over the last three months.

5. Rotation in commodity rally

Agricultural commodities were playing catch-up with industrial ones in overnight trading, on perceptions that base metals have moved too far, too fast.

Coffee, Oats, Rough Rice and US Soybeans Futures were all outperforming copper, Aluminum and Zinc on confidence in a broad-based increase in consumer spending power.

Crude oil futures, meanwhile, retreated from another 13-month high, which they had posted on the back of reports that Goldman Sachs (NYSE:GS) analysts now see the rally going as far as $70 a barrel. By 6:30 AM ET, U.S. crude futures were up 0.9% at $62.26 a barrel, while Brent crude was up 0.8% at $64.89 a barrel. The American Petroleum Institute releases its weekly assessment of U.S. stockpiles at 4:30 PM ET.

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Zulzairin Muiz
Zulzairin Muiz

write as what *they* want u to ...  ... (Read More)

Feb 23, 2021 15:06 GMT· Reply
Tumelo Skhosana
Tumelo Skhosana

It has to fall below 40k  ... (Read More)

Feb 23, 2021 12:45 GMT· Reply
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+

Download the Investing.com App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.

Investing.com is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.