Market sentiment was a mixed bag this past week. On Wall Street[1], the Dow Jones climbed 0.2 percent over the past 5 trading sessions. But, the tech-heavy Nasdaq[2] Composite fared worse, shrinking 1.08%. Things were slightly rosier in Europe and within the Asia-Pacific region, where the FTSE 100[3] and Nikkei 225[4] climbed 0.52% and 1.69% respectively.
Taking a look at foreign exchange markets, the sentiment-linked Australian Dollar[5] and New Zealand Dollar[6] were some of the best-performing G10 currencies. The anti-risk Japanese Yen[7] weakened broadly. However, the similarly-behaving US Dollar[8] fared better, seeing a mixed performance against its major counterparts.
Looking at commodities, crude oil prices[9] were a notable standout. Initially, WTI climbed as much as 4.25% before turning lower, ending the week 1.14% lower. As the state of Texas gradually saw power recover following extreme cold climate, oil wells opened back up, restoring much-needed supply back into the market, pressuring energy prices.
In the week ahead, investors will likely continue watching developments in longer-term Treasury yields. Rising expectations of a gradual economic recovery from Covid-19 have been pushing those higher, alongside inflation estimates. As returns in fixed-income assets increase, it may draw investors slowly away from riskier and non-yielding ones. The latter include stocks and gold[10].
Key economic event risk ahead include testimony and speak from Fed Chair Jerome Powell, who may receive questions on developments in bond markets. The New Zealand Dollar is eyeing the RBNZ interest rate announcement and press conference. German consumer confidence may inspire Euro[11] volatility. What else is in store for markets in the week ahead?
