Russell 2000, S&P 500 rally to new highs
The S&P 500 rallied to a new high on Tuesday, ahead of Wednesday’s FOMC meeting, where it is expected that the Fed will begin tapering.
Tuesday’s rally comes as shares in Under Armour were trading over 16% higher, as the sportswear giant revised its profit forecasts.
Markets have been bullish this week, with several key fundamentals all taking place simultaneously.
Wednesday’s Federal Reserve meeting will be followed by Friday’s Non-farm payrolls report, where 450,000 jobs are expected to be added to the U.S. economy.
Along with new highs from the S&P 500, the Russell 2000 also climbed to its highest level on record.
GBPUSD falls to 3-week low as BOE uncertainty grows
GBPUSD was trading at its lowest rate in 3-weeks on Tuesday, as currency traders grew nervous ahead of Thursday’s Bank of England rate decision.
Although many still expect the bank to hike rates, some now believe that the MPC may hold fire on a decision this coming week.
|💡 We’ve been hearing about BOE hike in Interest rates for a while… Why the wait?|
One reason for the Bank of England to wait a bit is simply to collect more information about the direction of the economy. Is it going to keep pulling away from Covid woes, or sink back into them?
The reason to move fast is inflation – some worry that since it is already more than 3% the chance of it spiralling out of control is rising. That would leave the Bank playing catch-up, desperately trying to increase borrowing costs to rein in inflation that is racing away.
There seems to be uncertainty amongst members of the MPC, with some believing that a rate hike may not be enough to stop the recent rise in consumer prices.
As a result of this, the cable rate dropped to an intraday low of 1.3605, which is the lowest level it has traded since October 13th.
London’s FTSE 100 was also lower, falling 0.16% in the session.
Tesla shares decline, on Elon Musk tweets
Shares in EV giant Tesla were lower on Tuesday, as tweets from CEO Elon Musk downplayed a recent deal with rental company Hertz.
Hertz were said to have ordered 100,000 vehicles from Tesla, becoming the world’s largest renter of electric vehicles, however Musk shot down the magnitude of the transaction.
|💡 The “Musk Effect” something Investors should look out for |
The markets are familiar to Elon’s tweets. Tesla’s shares, crypto prices, and even the famous GameStop short squeeze have all been touched by the “Musk Effect”.
The company’s founder tweeted that, “Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers. Hertz deal has zero effect on our economics”.
Shares in the company were trading as low as 1,153.27 on Tuesday, after hitting a high of 1,208.59 to start the week.
“Trading is very competitive, and you have to be able to handle getting your butt kicked.”– Paul Tudor Jones