What you need to know on Friday, January 29:
The market mood has turned sour on Friday, with investors seeking refuge in the safe-haven US dollar amid escalating US-China tensions, fresh concerns on a cash squeeze in China and discouraging Novavax covid vaccine news.
US drugmaker Novavax Inc said that although its covid vaccine is 89.3% effective in the UK trial, its efficacy with respect to the South African strain is only 49%.
The Chinese central bank extended the net cash drainage, which spiked short-term borrowing costs and pre-Lunar Holiday demand for liquidity.
Also, markets digest the latest Reddit’s retail-trade frenzy seen over the last few days, which triggered a short-squeeze in some of the US stocks, with GameStop at the center of the scandal.
In order to bail out the hedge funds a few brokers banned buying these stocks on their platforms on Thursday, allowing sell-only mode. GameStop plunged on the trading restrictions, which drove the speculative flows into Silver futures while pushing the US dollar lower. The DYX also suffered due to downbeat US Q4 GDP and jobs data.
Risk aversion returned to markets, as Robinhood Markets Inc appears to have lift trading restrictions on some of the blocked stocks. GameStop and AMC surged in post-market trading, re-igniting volatility and boosting the greenback’s safe-haven appeal.
Across the FX space, EUR/USD is pressured around 1.2100, awaiting the German Q4 GDP release. USD/JPY refreshed seven-week highs above 104.50. AUD/USD tumbled with S&P 500 futures, now trading around 0.7650.
Gold clings to a familiar range of around $1850, as Silver corrects towards $26. Crude oil prices trade modestly flat, defending the $52 level.
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