• Investors worry about a new wave of infections
• European stocks finished in red
• Wall Street swung between gains and losses
• European stocks finished in red
• Wall Street swung between gains and losses
European indices finished first session of the week lower as investors optimism over the easing of lockdown restrictions faded due to concerns about a new wave of infections in China, South Korea and Germany, which is an ominous signal for all countries that are beginning to lift coronavirus-related restrictions. Dax dropped 0.7 %, CAC 40 declined 1.3 % and FTSE 100 finished today’s session flat.
Wall Street is trading mixed on Monday. From one side investors are concerned about a second wave of COVID-19 and on the other side markets welcomed news that the Trump administration is discussing with Republicans and Democrats on the possibility of introducing an additional stimulus package, which could include food aid and broadband access. Also market sentiment improved after Italy and New York announced a fall in the number of new cases and daily deaths. Also Apple (AAPL.US) informed it will start to reopen US stores this week. Marriott International (MAR.US) shared dropped 5.9% after company's quarterly profit came in well below already drastically lowered expectations as bookings plunged. However Nasdaq pushes higher as gains for tech-related stocks helped it build on a rally last week where it recovered all its 2020 losses on hopes of a pickup in business activity. The Dow Jones fell 0.14 %; the S&P 500 erased early losses and gained 0.3% and Nasdaq rose 1.1%.
WTI futures traded around $24.5 a barrel and Brent crude erased early gains and traded around $29.9 a barrel in another volatile session. Earlier Brent traded above $31 per barrel after Saudi Arabia asked the kingdom's oil giant Saudi Aramco to reduce its crude production for June by additional one million barrels a day, on top of the reduction already announced under the latest OPEC+ deal.
Despite gloomy news gold prices fell today, indicating that usual inverse correlation between safe haven and risk assets again broke down. Gold futures for delivery on the Comex exchange fell over 0.9% at around $1,699.00/oz, while spot gold was down approximately 0.3% at $1,697.20. Silver futures were down 0.8% at $15.42 an ounce, while platinum futures were down 1.3% at $779.45.
On Friday, Commodity Future Trading Commission data pointed that the money inflow began to decrease: net long positions in gold reached their lowest levels since August, while net longs in silver hit their lowest since July. Demand for physical metal from India declined in response to high prices and the weakening of the rupee. According to World Gold Council data, in the first quarter imports dropped 50% compared to last year, while Chinese imports fell by 62%.
It seems that US dollar was the only beneficiary of today's increase in risk-off sentiment. The dollar index rose above 100 adding more downward pressure on precious metals.
There is not much on Tuesday’s agenda when it comes to macro releases. CPI readings from the China US will be the key releases scheduled for tomorrow and analysts are expecting that both reading will show a modest drop. Oil traders will be looking at API inventory numbers.
USD/CAD bounced off the major support line at 1.3909 and is heading toward downward trendline. If buyers manage to break above it, an upward impulse towards 1.4289 could be launched. On the other hand, once sellers regain control, the support at 1.3709 may be at risk. Several provinces in Canada started gradually to reopen businesses that were shut down to fight the fast-spreading virus. Meantime, Prime Minister Trudeau warned on Saturday that if provinces acted too quickly, a second wave of the pandemic could send Canada back into confinement this summer.
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