• Weak economic data from the US and Eurozone
• Oil price pushes higher
European indices finished today’s session higher as investors awaited the outcome of a EU Summit later in the day at which European leaders are set to discuss measures to support coronavirus-hit economies. According to Bloomberg, German Chancellor Angela Merkel will tell EU leaders on Thursday that the coronavirus economic response package "must be huge." This headline by itself provided some boost to the market sentiment. Euro managed to break above 1.08 and major European equity indexes also posted decisive gains despite the fact that the eurozone composite PMI fell to a record low of 13.5, as demand for services in particular collapsed against a background of reduced incomes and extremely depressed confidence. DAX 30 finished 1.1% higher, CAC 40 advanced 0.9% and FTSE100 rose more that 1%.
US indices are trading in green today amid signs of additional output cuts by major oil producers and rising tensions in the Middle East. Yesterday President Trump tweeted he has instructed the US Navy to shoot down any Iranian gunboats that harass US ships at sea. Iran officials replied that US warships will be destroyed if they threaten Iran in Gulf. Also, the Oklahoma’s energy regulator approved an emergency order that allows oil producers to stop or reduce production without losing their leases for non-production. WTI oil extended yesterday gains and wass trading around $18 a barrel. Brent price hit $23 per barrel.
It seems that investors have once again ignored the weak macroeconomic data from the US which showed the number of Americans filing for unemployment benefits came in at 4.427 million in the week ended April 18th, above market expectations of 4.2 million. Today's figure was however lower in compare to 5.24 million from the previous week. Latest Markit PMI data showed US private sector and services activity plunged at a record pace in April. "The decline in initial jobless claims is encouraging, but the damage has already been done with the insured unemployment rate surging to a record high in the (previous) week," said Paul Ashworth, chief U.S. economist at Capital Economics. US stocks rose based on further stimulus hopes as the House of Representatives is expected to pass a $484 billion coronavirus stimulus package today, aiming to provide help for small businesses and hospitals. Most of the economy is likely to be restarted by the end of August, Treasury Secretary Steven Mnuchin said late Wednesday. This comes as more states in the South and Midwest signaled readiness to reopen their economies in hopes the worst of the coronavirus pandemic had passed, with the notable exception of California. "The worst is probably over in terms of the epidemic, but with oil prices at these levels, there will be layoffs coming in from the energy sector and that will offset the fact that states are beginning to open up," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Gold prices rose after the decision of the European Central Bank regarding loosening of rules on collateral for credit operations, which means that the ECB will continue to lend to Italian banks, even if their sovereign’s credit rating is downgraded to junk as a result of the pandemic. Gold prices rose to as high as $1750/oz and silver futures gained 1.4% at $15.55/oz.
UK retail sales, German ifo business climate index and US core durable goods orders are the main data releases scheduled for tomorrow. On the earnings front Verizon Inc (VZ.US) and American Express Co (AXP.US) will report their quarterly results.
EURCHF -recently we have witnessed increased volatility in many markets due to concerns regarding recession. However the EUR / CHF currency pair remains muted due to SNB intervention, which aims to stop the appreciation of the Swiss franc. This is signaled by growing sight deposits, which have recently risen to the highest levels since the peg removal from the 2015. This probably means that SNB has an unofficial peg in EUR / CHF at 1.05. Today EURCHF bounced of from this key support zone, however traders should continue to closely follow the future moves of this currency pair, as breaking this level may lead to significant price movements. 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.
