CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Daily summary: Stock rally loses momentum

18:40 21 May 2020

• Global stocks lower amid US-China Tensions
• PMI readings  showed that major economies continue to contract at a steep pace
• US Initial Jobless Claims Top 2.4M

European markets closed in the red at the end of a volatile session on Thursday amid rising US-China tensions. The US Senate a passed a bill  that could prevent some Chinese companies from listing their shares on US exchanges if they fail to comply with the US audits for three consecutive years. Also President Trump's new attack on Beijing’s handling of the pandemic raised concerns about the trade deal reached last year. On the economic data front, the latest claims report showed 2.438 million people filed unemployment claims during the week ended May 16th, slightly above analysts’ forecasts of 2.4 million and bringing the total to near 39 million since the beginning of pandemic. Today a lot of PMI readings for Germany, Great Britain, France  and US were published. Some of them turned out to be better than expected, nevertheless it is worth stressing out that all of the readings came in below 50 points, which means that the economy is shrinking. During today’s trading session DAX 30 lost 1.4%, CAC40 dropped 1.2 % and FTSE 100 finished 0.9% lower.

Wall Street's main indexes dropped about 1% on Thursday as investors worried about escalating U.S.-China trade tensions and concerns over a quick rebound from a coronavirus-led economic slump. Later in the session US equities managed to recover some of the early losses. Dow Jones is currently down 0.27%,  S&P500 fell 0.55% and Nasdaq is trading 0.58 % lower.

However despite grim macroeconomic outlook, the S&P 500 is less than 15% from its historical highs. Recent rally was driven mostly by technology companies  such as Facebook or Amazon, which are currently trading at their record levels. The Nasdaq technology index is only a few percent away from its historical highs, and, for example, Amazon's capitalization of $ 1.25 trillion is greater than all companies from the German DAX index, which includes 30 companies.  However from a technical point of view, the S&P 500 might be overvalued. According to Bloomberg,  S&P 500 is trading approximately 10% above the 50-day average. Last time similar situation occured in 2009. If the story were to repeat itself, there is a chance that now the S&P 500 might start trading in a sideways range.

Gold price is drifting away from a near eight-year high, heading for its first loss in three sessions on Thursday, as the strong US dollar put more selling pressure on the metal. “Gold seems to have lost a little momentum since breaking above $1,750 and the rise in the dollar today doesn’t seem to be helping,” “However, the enormous amount of monetary stimulus in the system, the need for that to continue for some time and the inflation risk are all bullish for gold in the longer term,” OANDA analyst Craig Erlam said in an interview with CNBC.

Japan's Consumer Price Index, BoJ interest rate decision and Monetary Policy Statement will be the key releases of the Asian session while UK retail sales  and ECB Monetary Policy Meeting Accounts will be on watch during European trading hours.

Gold failed to break above key $1750.00/oz resistance level and the price pulled back. Metal is currently testing 20 MA (green line). Key support is located at round $1700.00/ oz level. Source: xStation5

This content has been created by X-Trade Brokers Dom Maklerski S.A. This service is provided by X-Trade Brokers Dom Maklerski S.A. (X-Trade Brokers Brokerage House joint-stock company), with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. X-Trade Brokers Dom Maklerski S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

Back