Daily summary: U.S. gridlock over stimulus keeps stocks muted

8:20 PM August 7, 2020

• The US economy added 1.76 million jobs in July 2020
• Trump bans dealings with Chinese owners of TikTok, WeChat
• Gold retreats from record high

European indices managed to erase early losses and finished final session of the week slightly higher. Recent industrial output figures from Germany and France beat market expectations and German exports increased by 14.9% from a month earlier, most since 1990. However increasing geopolitical tensions and mixed US employment report weighed on market sentiment. During today's session DAX 30 added 0.5%, CAC 40 finished flat and FTSE 100 gained 0.1%   For the week, the DAX 30 advanced 2.8%, CAC 40 jumped 2.2%,  FTSE 100 advanced 2.3%.

Meanwhile US indices are shifting between gains and losses. President Trump signed executive orders to ban transactions with Chinese apps Tencent's WeChat and ByteDance's Tiktok. US Treasury has imposed sanctions on Hong Kong chief executive Carrie Lam, and 10 other top officials from Hong Kong and mainland China for "implementing Beijing's policies of suppression of freedom and democratic processes". As if that was not enough, Trump decided to reimpose 10% tariffs on some Canadian aluminum products while Ottawa pledged retaliation. Meanwhile, closely watched NFP report showed the US economy added more jobs than expected in July, mainly boosted by a jump in government payrolls. However private sector employment and manufacturing payrolls came in below analysts' expectations. At the same time, many investors lost hope that US lawmakers will reach an agreement on coronavirus stimulus package today.

Gold pulled back from previous session's record high of $2,074 an ounce  to trade around $2,027 an ounce amid a stronger US dollar. It seems however, that gold for the ninth time in a row will finish the week in green. This would be the longest streak of weekly gains in approximately ten years. Gold rose over 35%  this year thanks to ultra-low-interest rates and concerns regarding the recovery of the global economy.
For the same reason Oil prices dropped more than 1% on Friday, pulling back from a week of gains. The surging number of new coronavirus cases remains the dominant issue for the demand outlook. Spread of pandemic continue to accelerate in the United States , while India recently reported a record daily jump in infections. Almost 720,000 people have died in the worldwide pandemic. During today’s session Brent crude lost 1.3%, to $ 44.52 a barrel  and WTI crude fell 1.4%, to $ 41.35 a barrel. Brent is set for a weekly gain of 2.8%, while WTI is on track to rise 2.7%
AUDUSD is trading in local sideways move. Today pair bounced off the upper limit of consolidation range at 0.7242. If sellers manage to break below the lower limit of the range at 0.7060 ,then the downward move into 0.6982 is possible. However, in case of a break higher, the next resistance to watch is 0.7328. Source: xStation5

The content of this report has been created by X-Trade Brokers Dom Maklerski S.A., with its registered office in Warsaw, at Ogrodowa 58, 00-876 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. X-Trade Brokers Dom Maklerski 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.