Stocks correct yesterday’s gains

Monday’s huge rally in equity indices is getting quickly undone on Tuesday as all the major indices are deep in negative territory, with the Nasdaq 100 index down more than 1%.

According to the latest data, the number of new coronavirus infections globally rose last week for the first time in seven weeks.

WHO Director-General Tedros Adhanom Ghebreyesus said the rise in cases was “disappointing but not surprising,” warning that it was too early for countries to rely solely on vaccination programs and abandon other measures.

Later in the day, the EU CPI is expected to tick higher to 1% YoY, but the core inflation index is seen dropping notably to 1.1% from 1.4% previously. The ECB is not doing enough to push the official inflation numbers higher, despite massive rallies in commodities, real estate, stocks, and basically everywhere. 

In the FX, the EURUSD pair was down sharply and tested the 1.20 level to the downside. If this support is taken out, we could see another leg lower toward February lows at 1.1950.

The USDJPY pair is up six consecutive days and was seen attacking the 107 threshold for the first time since August 2020.

US yields stabilized somewhat, but the 10-year yield is still near 1.5%, which is an elevated level. Unless we see yields going lower toward 1.1% or so, volatility in the markets should stay higher.

Source: https://www.axiory.com/market-news/stocks-correct-yesterday-s-gains