Markets Weekly Recap

Markets Weekly Recap

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Key Takeaways

• Stock market roiled by a surge in prices increased Delta variant worries
• US dollar declines near the end of the week, gold pushes near $1,840 per troy ounce

A week, packed with volatility, uncertainty, and hopes for a brighter future went by. Higher-than-expected inflation prints and rising Delta virus cases were among the major causes for concern among market participants.

On the other end was Federal Reserve Chairman Jay Powell who appeared before Congress this week trying to assuage investors that inflation is temporary and the economic recovery would continue to accelerate.

Throughout the week, major US indexes wobbled, while the US dollar depreciated across the board. On Tuesday, the consumer-price inflation in the US rose to a 13-year high of 5.4% for June. The continued price growth cast fears that the inflation footprint could turn out to be more persistent than the US central bank had predicted.

Fed Asset Purchasing Continues

On that note, Fed Chair Jay Powell testified before the Committee on Financial Services on Wednesday as part of the semiannual monetary policy report. During his speech, he stressed that even though inflation has spiked in recent months, the Federal Reserve will continue its asset purchases at the current pace of $120bn a month. Mr. Powell also appeared before the Senate Banking Committee on Thursday. In his speech, he mentioned he viewed inflation as a product of one-off factors and he expected higher prices to moderate to lower levels as the economy continued to expand.

The week kickstarted the quarterly earnings season for the second trimester of 2021. Banking firms were the first to report financial results for the quarter ended June. Citigroup, JPMorgan, Goldman Sachs, Morgan Stanley, all reported better than expected earnings as the economic reopening has brought back deal-making and consumer spending.

Meanwhile, in Europe, the Delta variant spread across the continent as governments struggled to contain the threat. Several countries, including France, Greece, and Spain, reintroduced restrictions as a way to curb rising cases. The UK, in sharp contrast, decided to remove virtually all restrictions starting Monday.

The US dollar declined broadly in the second half of the week after it was advancing across the board on Monday and Tuesday. Gold pushed higher from the start of the week and ultimately advanced nearly 2.5%, or $42, to a weekly high of $1,834. Silver gained over 2% to a weekly peak of $26.45.

Cryptocurrencies this week were largely under pressure. Major coins, such as bitcoin and ether, declined for the week. Bitcoin slid roughly 6%, while the Ethereum token tumbled about 10% as market participants weren’t able to ignite a solid buying momentum.