21 August: Overnight Market Wrap

21 August: Overnight Market Wrap

Key Points:

Jobless claims up on the week by 1.1m from 920k expected

Tech sector buoys risk rally

US yields down, USD down, Metals up

Despite some strength in the USD for most of the day the post weekly jobless claims retracement kicked in and we saw USD weakness continue throughout the US session. A print of 1.1 million weekly claims more than the 920k expected caused an about turn in the momentum seen throughout the day despite continuing claims print being better than expected at 14.84m. Stocks had been under pressure ahead of the release as markets continued to digest FOMC minutes, however a tech rally spurred the Nasdaq to close at another new record high with Tesla breaking 2000 for the first time and Apple higher once again. Tesla is now over 1000 x earnings in value! The S&P500 incredibly had 70% of stocks in the red but the tech stocks allowed it to finish up 10 points on the day. Lower US yields was the catalyst for a turn in metals. After pushing above 1950 during the Asian session, Gold moved lower throughout the day testing 1925 ahead of the weekly claims before squeezing back through the highs of the day to 1955 as the USD weakness spread. Silver also followed closing up 2.5% on the day. Cable put in an impressive rally spurred by the London fixing rising from 1.3080 to clear 1.32 into the close however, the EUR lagged in comparison but has now pushed back through 1.1850. The risk rally was buoyed by positive news surrounding the virus cases and a gradual slowing in the southern states where the rise had been prolific recently but the claims data showed there’s still some way to go for the economy yet. A quiet day ahead for the Asian session is expected where we will see some preliminary data from the ABS around Australian retail sales with UK retail sales and European PMI’s later. The week is rounded off in the US session by Canadian retail sales and US PMI but it will all be about consolidation or further growth in the tech sector.

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