Daily summary: Global stocks rise despite stimulus doubts

• European stocks hit 3-week highs

• US oil inventories fall for 3rd week
• UK economy shrinks by record 20.4% in Q2
• Lack of progress on US stimulus negotiations

 

European indices finished today's session higher mainly boosted by a telecom stocks rally on reports that Liberty Global is taking over Sunrise Communications in a deal valuing the group at $7.4 billion. On earnings front, ASOS stocks were up on positive earnings results, while Admiral shares rose almost 6% as the company reinstated its deferred special dividend and posted higher earnings figures. Recent GDP data showed Britain's economy shrank 20.4% - the most on record during the second quarter,  while monthly figures pointed to a stronger-than-expected recovery in activity in June. DAX gained 1%, CAC 40 rose 0.9% and FTSE 100 finished 2% higher.

 

US indices are trading higher with S&P 500 edging closer to a record high, mainly thanks to higher oil prices and better-than-expected inflation data for July. Oil prices rose today thanks to  bigger-than-expected drop in US crude oil inventories last week according to both the EIA and API.  US crude inventories fell by 4.512 million barrels, the third consecutive week of decrease, compared to analysts' forecasts of a 2.875 million drop. During today’s session WTI oil rose 1.78% and Brent is trading 1.69% higher. Meanwhile  US core consumer prices, which exclude volatile items such as food and energy, increased  0.6 % from a month earlier in July 2020,  and above market expectations of 0.2%. Today's reading showed the largest increase since January 1991.
Meanwhile, investors welcomed news that Democratic candidate Joe Biden chose Senator Kamala Harris as his running mate, however markets still await new developments about the US coronavirus relief package. Both sides still cannot agree on issues such as unemployment benefits and aid to state and local governments. On the corporate front, President Donald Trump had announced plans to buy 100 million doses of Moderna's experimental anti-Covid 19 drug  when it passes its stage 3 tests. Tesla  also gained as it announced a five-for-one stock split in an attempt to make its shares more accessible to employees and investors.

 

Currently mood in the markets seems to be good, but at the same time very fragile. It can be assumed that if any negative information hits the markets, then sell-off may occur on virtually all asset classes. Yesterday's gold lost more than 5%, while silver fell as much as 15%, for no apparent reason. Today, precious metals are trying to recover. Gold rose 1.34% and silver added 2.36%. However, if negative factors appear on the equity market, then the declines may be even greater. Therefore, the market as it stands needs constant stimulation. Such voices are heard even from the Federal Reserve, which believes Congress should come to an agreement on the stimulus package as soon as possible. Without it, a stronger economic collapse may occur.

Tomorrow’s economic calendar is quite light with US  Weekly Jobless Claims being the only noteworthy reading scheduled for release.

NZDUSD – during today’s session currency pair broke below the support level at 0.6567 however sellers failed to uphold momentum and price moved higher. Should upbeat moods prevail, resistance at 0.6752 may come into play. Source: xStation5

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