Stocks Reverse After NYC Schools Shut | GKFX Prime

GURU WISDOM

“Be who you are and say what you feel, because those who mind don’t matter and those who matter don’t mind.”– Bernard Baruch
 

MARKETS

Bitcoin continues to march higher to its own beat, irrespective of the movements in stock markets or gold. Bitcoin now has a negative 14-day correlation with gold, meaning when gold falls, Bitcoin rises and vice versa. This is unusual because Bitcoin is often referred to as the ‘digital gold’.

The Dow Jones dropped over 300 points and the S&P 500 fell over 1% for a second day running as the last week’s vaccine-induced rally ran out of steam. Asian and European stock markets had mostly finished higher but there was a late slump in the US triggered by the decision to close schools in New York City.

The dollar gained slightly amid the risk-off tone but volatility continues to remain very low in FX with EUR/USD tracking around 1.18 and GBP/USD around 1.32. There were some moves into the Japanese yen with USD/JPY dropping back below the 104 handle.

Gold was sold-off for a second say but remains within the $1860-1900 range of the past week. Crude oil nudged higher with Brent near $44 and $41.5 resistance. 
 

NYC schools

Of course, whether schools are open or not in New York City only affects a very small group of people compared to the rest of the world. However, as the largest school district in the United States- investors are looking at it as a likely forbearer of new restrictions in other parts of the country that will pull down the economy and corporate profits.

The successful vaccine trials have removed some of the long term risk that had been holding investors back but getting through the winter months with the coronavirus poses significant short term risk to markets, especially without any sign of fiscal stimulus. 
 

NZD/USD

The top FX performer was the New Zealand dollar, which struck its highest since December 2018. The currency was a big outperformer during the first wave of the pandemic but drifted sideways during the summer when case numbers dropped. The currency has found new strength in the second wave and might be setting up for another big up-trending move should it surpass the 0.70 level.