• Lufthansa and German government agree $9.8 billion rescue package
• Anti-government protests in Hong-Kong
For some time, stock markets around the world have been ignoring rising number of new coronavirus cases. Concerns regarding rising US -China tensions are not able to spoil investor’s moods either. Over the weekend thousands of people took to Hong Kong streets to protest Beijing's national security law. The US said will add 33 Chinese firms and institutions to an economic blacklist White House National Security Adviser Robert O'Brien said on Sunday that China's latest move could lead to US sanctions. In response the Chinese Foreign Minister Wang Yi said Americans should give up its “wishful thinking” of changing China and warned US actions are pushing the two countries to the brink of a new cold war.
UK Treasury announced on Sunday it may step in to support crucial businesses on a 'last resort' basis if a viable company exhausts all options and its failure disproportionately harms the economy. In addition, political uncertainty grew as British Prime Minister Boris Johnson was under pressure to fire senior adviser Dominic Cummings following reports that he traveled during a nationwide lockdown in March when his wife was ill with COVID-19 symptoms.
Investor focus will now turn to the EU common recovery plan. Recently Netherlands, Austria, Denmark and Sweden opposed to the Franco-German recovery plan to issue EU debt to help worst affected. countries. Instead, the “frugal four” proposed over the weekend to create an Emergency Recovery Fund financed by loans only. Despite lower volatility German DAX index rose by2.9%, while the French CAC40 added 2.2%. Trading did not take place in the United Kingdom due to the Spring Bank Holiday. US stock futures are trading over 1% higher but the cash markets the NYSE and Nymex are closed today for the Memorial Day holiday.
Oil prices continue to hold gains on the back of the easing of coronavirus restrictions, with the benchmark Brent crude trading above $35 per barrel, near a 2-month high and WTI oil trading above $33.44 per barrel. Indian Oil Minister said that the country regained 65% of its appetite for fuel and demand is expected to reach nearly pre-pandemic levels next month. Meantime, Saudi state news agency SPA reported that Iraq and Saudi Arabia agreed over the weekend to continue working to rebalance oil market and stressed their commitment to production cuts agreed by the OPEC.
Gold fell below $1,730 an ounce on Monday after Nikkei newspaper reported that the Japanese government would approve another stimulus package worth $929 billion, mostly comprising financial aid for companies.
There is not much data scheduled for release tomorrow, therefore indices are likely to be driven by headlines related to Sino-US relations. US Conference Board Consumer Confidence index and New Home Sales are the key data releases which will be published tomorrow. Besides that investors will also get to know Dallas Fed Manufacturing Index and RBNZ Financial Stability Report. Apart from that BoC's Governor Poloz is scheduled to speech in the evening.
S&P 500 (US500) is trading higher despite low volatility. Currently the price is testing key resistance level at 2968.3 pts which is additionally strengthened by 200 MA (redline). Should upbeat moods prevail, resistance at $3159.7 may come into play. However If sellers manage to take control on the market, then downward move into 2828.3 is possible. Source: xStation5The 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.
