The seemingly unending rise of global stock markets has suffered consecutive days of losses, a jolt to the system for sure but it’s probably nothing to write home about. For sure, rising Covid-19 infection rates in places like India and Brazil are shocking, but stock markets generally are forward looking indicators so should ordinarily keep being pumped up by the extraordinary stimulus that abounds across the globe.

US stock futures are modestly in the green as reopening plays led the market lower overnight. The Vix index, a volatility measure that tracks movement in the S&P500 over the coming 30 days is pushing higher today once more, after hitting a 14-month low last week. But Wall Street’s fear gauge is still below 20 and only teetering on levels seen back in March.

Netflix takes a pounding

The streaming giant and in many ways, stay-at-home bell weather plunged nearly 10% in extended trading after subscriber additions fell way short of Wall Street estimates, as the demand boost from the pandemic started to fade. A delay to some of its big-name shows and films was blamed for adding just 3.98 million paid new customers against forecasts of 6.2 million.

Although the company posted better than expected earnings for the first quarter, there is much focus on the first of the FAANG stocks to report and those companies that might be at risk for slowing momentum as economies reopen.

EUR traders watching 1.20

The risk-off environment has helped the greenback over the past couple of sessions as the Covid contagion hotspots grab the headlines. Commodity currencies have been hurt but whether USD can sustain more gains is up for debate. US bond yields, a key driver of the dollar’s rise this year, are treading water around 1.56% while any stabilisation in sentiment should see a resumption of this month’s dollar decline.

EUR/USD is probably in a holding pattern now until the ECB meeting tomorrow, although no fireworks are expected from President Lagarde.

So, it is global risk sentiment which will determine if the euro can stay above 1.20 with yesterday’s shooting star and the 100-day moving average capping higher prices of the time being.

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