Daily summary: Global equities gain on US stimulus package optimism

European indices finished today's session higher as recent PMI data showed that business activity in the Eurozone returned to growth in July. Also upbeat news regarding the potential agreement on a US coronavirus relief package boosted market rally. On the earnings front, both Allianz SE and DHL quarterly earnings came above expectations while Commerzbank AG projected a full-year loss. DAX 30 rose 0.5% CAC added 0.9% and FTSE 100 finished 1% higher.

US indices are trading higher as better than expected macroeconomic data and positive earnings results from several US companies lifted market sentiment.  ISM's non-manufacturing activity index increased to 58.1 last month, the highest since March 2019, meantime  Disney unexpectedly reported quarterly profit. Also CVS Health, Humana and Regeneron Pharmaceuticals reported better than expected results while Johnson & Johnson announced a deal with the US government to manufacture millions of doses of its candidate vaccine to treat COVID-19 in case it proves successful. These news completely overshadowed the fact that ADP report, which is considered a precursor to the NFP report which will be released on Friday, came in far below analysts' expectations. Today's reading showed private payrolls increased only by 167,000 while market expected 1.5 million rise.

 

Investors also welcomed positive news regarding stimulus negotiations. Yesterday Treasury Secretary Steven Mnuchin said that congressional Democrats and White House negotiators are trying to reach a deal by the end of this week and that both sides have made progress on key elements of the project. Also House Speaker Pelosi said today, that she is confident that lawmakers will have agreement on coronavirus relief, however she declined to say whether lawmakers must reach agreement on coronavirus aid this week. In her opinion President Trump can't use executive orders instead of legislation for coronavirus relief package. Meanwhile tensions between Washington and Beijing also eased somewhat after it was announced that representatives of the two countries would meet in mid-August to review the trade deal.

 

Despite these positive news  investors remained concerned about a spike in coronavirus infections worldwide as US, Brazil and India, which are the three countries hardest hit by the pandemic, reported over 50k new cases yesterday. There is also concern about the increasing number of deaths, especially in Latin America. The region has now recorded more than 206,000 deaths, approximately 30% of the global total.

 

Oil prices rose on Wednesday reaching highest level since early March, after recent EIA and API reports showed that US crude inventories declined more than expected last week. WTI crude futures touched $43.5 per barrel and Brent crude futures hit $46.2 a barrel.

A weaker U.S. dollar and continuing appetite for safe haven assets pushed gold to new record highs. During today's session  gold price rose 2% to $ 2,061.80 an ounce. Meanwhile silver rose nearly 3% to $27 an ounce, its highest level since April of 2013.

 

There is quite a lot on the agenda tomorrow. During the European session investors will get to know BOE interest rate decision after which Governor Andrew Bailey will hold a press conference. During US session investors attention will focus on the Unemployment Claims report which may provide another hint ahead of Friday's NFP data. On the corporate front, T-Mobile US,  Siemens AG, Adidas, Uber, Electronic Arts Inc. will publish their quarterly results.