Global market sentiment ended on a fairly mixed note this past week. Taking a look at Wall Street[1], the tech-heavy Nasdaq[2] 100 climbed about 2.3%, outperforming the cyclically-sensitive Dow Jones, which sank roughly 1.3%. The S&P 500[3] was caught in the middle, rising 0.42%. In Europe, the FTSE 100[4] declined 1.69% as the DAX[5] 40 gained 0.41%. In the Asia-Pacific region, Japan’s Nikkei 225[6] gained 0.46% as Australia’s ASX 200[7] fell 0.62%.
Covid lockdown woes resurfaced towards the end of last week in Europe. Austria announced a nationwide lockdown with Germany leaving the door open to one amid a resurgence in Covid cases. A combination of European coronavirus woes and inflationary concerns in the United States helped push the US Dollar[8] higher. This might have explained the rotation trade into tech stocks. Growth-linked crude oil prices[9] dipped, with WTI falling to its lowest since early October.
The United States is heading for the Thanksgiving holiday, where stock and bond markets will be closed on the 25th. This will create illiquid trading conditions, opening the door to volatility given sudden news or economic data releases. President Joe Biden is also expected to announce the next Fed Chair before Thanksgiving. While Jerome Powell is expected to keep his role, odds of a Lael Brainard nomination have been rising.
The markets are estimating her nomination to be relatively more dovish. Still, the next chair will have to face rising uncertainty about where inflation is going in the world’s largest economy. Core PCE, which is the central bank’s preferred inflationary metric, will cross the wires. This is on top of GDP, durable goods and University of Michigan
