Markets Calm, Eurozone GDP, Stimulus & ADP Data

3. Feb. 2021

Yesterday the financial markets’ new legendary superpower died. GameStop shares plunged by 50%, and AMC shares value decreased by 40%, etc. Even silver lost about 10% yesterday. Its growth was also associated with the retail investors’ attack in the beginning of the week (but it’s not certain). Actually, everything’s expected. The miracle didn’t happen—neither did the revolution. But it’s probably too early to disperse. There are still many low liquidity half-dead companies’ shares, so new volatility spikes are more than likely.

Consequently, financial markets relaxed again. The Fear Index fell sharply, stock markets grew in price, as well as oil did. In general, it’s the usual set, typical for the growth of risky sentiments. The only exception was the Dollar Index having finally formed a signal within the “inverted head & shoulders” pattern. It’s expected to grow in the foreseeable future.

If the dollar underwent strengthening in the foreign exchange market, the euro felt pretty uncomfortable. The Eurozone economy ended the fourth quarter with negative GDP growth. It practically guarantees a double dip recession, since the first quarter of 2021 is also likely to be another disaster.

Another reason for optimism was the stimulus package related news from the US. The Democrats seem to be working in two directions. On the one hand, they are trying to come to an agreement with the Republicans. On the other hand, they are doing everything so that the package’s fate can be defined by a simple majority both in the Senate and in Congress.
It’d be extremely interesting to follow the current data on US employment by ADP. Past NPF data were a disappointment. Today’s data may shed some light on what’s expected to happen on Friday.