• Trade tensions between the US and Europe began to mount
• IMF predicts deeper global recession due to the pandemic
• Number of new Covid-19 cases continue to rise across the globe
European indices extended yesterday losses, after news that Trump administration might implement new exports tariffs worth $3.1 billion on goods from the UK, France, Spain and Germany, such as olives, beer, gin and trucks. President Trump is also considering higher duties on products including aircrafts, cheese and yogurt. Rising number of coronavirus cases in the US, Latin America, Middle East and Germany also weighed on markets moods. On the corporate side, Wirecard (WDI.DE) shares plunged after former CEO Markus Braun was arrested yesterday and released on EUR 5 million bail. DAX 30 dropped almost 4%, CAC 40 declined 2.6 % and FTSE 100 finished 2.82 % lower.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appUS indices are trading under pressure amid increasing concerns about a second wave of coronavirus infections. Yesterday 36 000 new cases has been reported in the US, it is the highest number since the beginning of May. Several states including Texas, Florida, Arizona and California saw a new record high number of infections. Washington state made face masks mandatory in public places. Governors of New York, New Jersey and Connecticut announced that visitors from states with high coronavirus infection rates must self-quarantine for 14 days on arrival. Meantime the EU is considering implementing a travel ban on American citizens due to the recent surge of the coronavirus cases. White House health adviser Anthony Fauci has said the next two weeks could be critical in containing the outbreak. Currently over 2,43 million people are infected in the US. Dow Jones fell 2.68 % S&P 500 is down 2.57 % and the Nasdaq is trading2.27 % lower.
According to the International Monetary Fund, the closure of economies and consumer uncertainty will lead to a deeper decline in GDP than expected in April. It is currently estimated that the decline in global GDP this year will reach 4.9% (3% was expected in April). The rebound in 2021 is expected to reach 5.4%, although 5.9% was previously expected. The largest, almost double digits, declines are to be recorded in Latin America. Analysts now expect that U.S. output will shrink 8.0%, more than 2 % points worse than the April forecast.
Oil prices plunged over 3% on Wednesday, with WTI crude below $38 a barrel and Brent crude near $40.20 a barrel after recent EIA report showed that US crude inventories rose by a much bigger-than-expected 1.442 million barrels in the latest week. Earlier in the session, oil prices were already falling due to further oversupply and demand concerns. Crude oil is retreating due to the possibility of a deeper economic slowdown. On the other hand, gold reached new 8-year highs at USD 1780 per ounce, which shows that investors are hedging against lurking risks.
Fitch downgraded Canada's rating to AA+ from AAA with a stable outlook, saying that the downgrade reflects the deterioration of public finances resulting from the pandemic. Fitch believes that Canada will run much higher deficits and will emerge from the pandemic with higher debt ratios, including gross government general debt of 115.1% to GDP.
Some noteworthy data reports will be released today. German GfK Consumer Climate and ECB Monetary Policy Meeting Accounts will be the key release of the European session while US jobless claims, GDP figures and durable goods orders will be on watch during US trading hours.
AUDUSD - Aussie is trading under pressure as investors rush for safe-haven currencies amid concerns over a second wave of the coronavirus infections. Currency pair is approaching local support at 0.6858. If sellers will manage to break below, then support at 0.68 may be at risk. Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
