Daily summary: Downbeat mood persists as treasury yields rise

Most of the major European indices finished today's session lower, with DAX 30 index fell almost 1% as prospects of tightening from major central banks weighed on market sentiment. ECB will meet on Thursday and will face a difficult task of taming inflation from record levels without derailing the fragile economic rebound. Investors also digest results from the Presidential election which showed Emmanuel Macron and Marine Le Pen going into a tight run-off after topping the first round. The results are similar to 2017 but some analysts believe the far-right candidate has never been so close to winning. 

Downbeat moods prevail on Wall Street as well, where  Dow Jones fell nearly 0.80%, while the S&P 500 and Nasdaq  dropped 1.27% and 1.55%, respectively, while bond yields jumped sharply.  The 10-year Treasury yield jumped to 2.78% which is the highest level since early 2019 as investors expect aggressive tightening from the FED.  This week market attention will focus on US inflation data on Tuesday and the beginning of the Q1 earnings season. On the corporate front, Twitter stock took a hit after news that Elon Musk will not join the company's board.

Precious metals moved sharply higher during the European session, however gains were erased after US traders joined the market. Currently both gold and silver are trading near the flat line. Oil took a hit on Monday due to the deteriorating pandemic situation in China which may weaken demand. Brent price returned below $100.00 per barrel, while WTI fell to $94.30 per barrel. Meanwhile US natural gas jumped above the key resistance at $6.6/MMBtu and reached a level not seen since December 2008, amid lingering worries about global energy supplies exuberated by the war in Ukraine against a growing demand backdrop. Also wheat prices rose sharply after USDA lowered global ending stock forecasts by 3.1 million tons to 278 million largely due to lower exports from Ukraine, projected at 18.2 million tonnes, which is half of last year’s shipments. Major cryptocurrencies also took a hit as correlation between Bitcoin and Nasdaq seems to be stronger than ever. Most popular cryptocurrency approaches psychological support at $40,000 while Ethereum dropped to $3000.

GBPUSD fell sharply in recent weeks however sellers struggle to break below major support at $1.30. If buyers will manage to regain control, another upward impulse towards 1.32 may be launched. This level coincides with 38.2% Fibonacci retracement of the upward wave launched in March 2020. On the other hand, if current sentiment prevails, downward move may accelerate towards next support at 1.2850 which coincides with 50.0% retracement. Source: xStation5