Excitement in the financial markets

Analyse der Finanz- und Warenmärkte

Market Watch review. 16.04.2021

In today's release, we’ll cover the following topics:

  • Rising trend in financial markets.
  • Coinbase crypto exchange IPO.
  • General weakening of the US dollar.

Let's start today's review with optimistic news - we are still seeing a steady upward trend in the financial markets and, as a result, investment bankers are unexpectedly showing very high returns. So traders of Goldman Sachs and JPMorgan increased profits by 47% in the first quarter of this year. Of course, all this is possible only thanks to the financial incentives of the US government and the Federal Reserve. Nevertheless, we are all interested in the question: will this trend last this year, and possibly in the longer term?

To quote Goldman Sachs CEO David Solomon - "I don't think we should expect the same kind of activity in the third and fourth quarters". Of course he is cautious in his statements, but even this comment allows to estimate the level of his optimism. As a result, one should not bet on further growth of activity in the US stock market. Accordingly, we hear about the increasing probability of a correction in the US stock market, which may provide long-term support for the US currency.

And now let's move on to the IPO of the Coinbase cryptocurrency exchange, which started with a capitalization of $99 billion, and at the moment it exceeded $110 billion. However, further growth in stocks is possible only if two complementary factors are met: the soft monetary policy of the US Federal Reserve and the financial incentives of the US government. All this is aimed at saving the economy, but it is also a very strong growth driver for the stock market and the cryptocurrency market.

Shifting to the foreign exchange market, I note the general weakening of the US dollar in the first half of the week. We have not seen any obvious sell-offs, while the bullish trend in the US stock market contributes to the weakening of the US currency, even against the background of a fairly high rate of economic recovery. Therefore, there is still a risk of strengthening the US dollar in the medium term, and its current weakening may turn out to be another correction.

I will conclude today's release with a brief analysis of the current situation on the oil market. For the third week in a row, we see a decrease in oil reserves in the United States. At the same time, the rate of their reduction is growing, thereby providing significant support to oil quotes. But the rise in prices for "black gold" may be short-term, because OPEC+ is ready to increase production, therefore significantly reducing the supply deficit and, as a result, putting pressure on oil quotes.

Closely monitor the news background and be prepared for all the surprises of the market.


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