Daily summary: Global equities rally as Chinese euphoria overshadows the virus

7:56 PM July 6, 2020

  • Euphoria started during Asia trading hours

  • Global stocks rally, Nasdaq with new ATH

  • ISM Non-Manufacturing with solid gains in June

Monday started in a best possible way for global stocks as Chinese equities soared at an astonishing pace. Shanghai Composite finished the session 5.71% higher! While many might say that there was no specific catalyst for the rally, some point out specific media reports which might have been interpreted as some sort of a possible state intervention. Nevertheless, positive sentiment literally overshadowed all disturbing coronavirus news. 

European equities had a great trading day too as most major indices rose over 1.50%. DAX added 1.64% while FTSE 100 rose 2.09%. Wall Street opened higher as well with Nasdaq gaining the most (roughly 2.20% at press time). In fact, Nasdaq did climb to fresh all-time highs today as bulls maintain their dominance. Even though investors tend to flee towards the riskier assets today, some precious metal gain as well. Both gold and silver prices are up, the latter as much as 1.20% at press time. 

As far as the data front is concerned, today’s releases were quite mixed. First of all, investors had to deal with poor data from Europe. Spanish industrial production unexpectedly fell 24.5% YoY in May (vs expected: 18.5%) while German factory orders rose barely 10.4% MoM in May - analysts expected as much as 10.0%. Eurozone’s retail sales in May did a little bit better as the print came in above the forecast (+17.8% MoM vs 15.0% expected). On the other hand, investors should be pleased with data from the US as both PMI and ISM Non-Manufacturing came in above market expectations. The headline ISM Non-Manufacturing did exceptionally well as the index soared in June to 57.1 pts (vs expected 50.1 pts).

Tomorrow investors should pay attention to Japanese household spending data (01:30 am BST time). RBA will announce its interest rate decision, but market expects that the main interest rate will remain unchanged. In the morning Federal Statistical Office of Germany will publish industrial production data for the month of May. Some market participants might also be interested in Ivey PMI from Canada, which will be released in the afternoon BST time.

D30 continues to surge as the index remains in an upward trading channel. Nevertheless, the index is gradually approaching crucial resistance area (12,930 pts) and investors should certainly be prepared for some price reactions there. Source: xStation5

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