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Wealth Daily 06 April 2022

WEALTH DAILY 2022-04-06
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Shares on Wall Street fell on Tue with tech bearing the brunt of the selling, after Fed Governor Lael Brainard, who traditionally favors loose policies and low rates, gave a very hawkish speech. 

The Dow Jones Industrial Average lost 280.70 pts, or 0.8%, to close at 34,641.18. The broader S&P 500 index fell 1.26%. The tech-heavy Nasdaq Composite retreated 2.26%. The small cap Russell 2000 dropped 2.36%. 

Brainard called the task of curbing inflation pressures “paramount” and said the central bank may start reducing its balance sheet rapidly as soon as May.  Shares of Amazon (AMZN US, -2.55%), Apple (AAPL US, -1.89%), Alphabet (GOOGL US, -1.67%), Microsoft (MSFT US, -1.30%) and Meta Platforms (FB US, -0.88%) were lower on Tue. 

The yield on the 10-year Treasury note soared 15.18 basis points (bps) to 2.5674%. The yield on the 2-year Treasury note notched up 9.18 bps to 2.5139%. The 2- versus 10-year Treasury spread is no longer inverted. 

The US and allies are coordinating fresh sanctions on Russia, including a European Union ban on coal imports. Nevertheless, crude oil prices fell. The front-month Brent and WTI futures closed down 89 cents at US$106.64/bbl and $1.32 at US$101.96/bbl respectively. 

The ICE dollar index (DXY), which measures the strength of the greenback against a basket of currencies, rose 0.48% to 99.472. 

The most actively traded US gold futures (Jun) contracts settled down $6.50, or 0.3%, at US$1,927.50/oz. May silver, which is the most actively traded silver futures, fell 5.6 cents, or 0.2%, to end at US$24.534/oz. 

European equity markets finished mixed on Tue. The UK FTSE gained 0.73%, France's CAC 40 fell 1.28%, while the German DAX retreated 0.65%. Vestas Wind Systems (VWS DC, +8.59%) jumped after Credit Suisse upgraded the stock to “outperform” from “underperform” on the shift away from fossil fuels. 

Traders are pricing in the risk that France’s Emmanuel Macron might lose, ahead of Sun's first round of the French presidential elections. Options that protect against a drop in the euro over the next week have risen. The spread between 10-year French and German yields climbed to the highest since Apr 2020.