Daily summary: Global equity markets continue the bullish momentum

5:41 PM 3 June 2020
• Global stocks continue to rise
• President Trump suspends Chinese Airline flights to U.S.
• Gold heads below $1,700/oz

European indexes extended gains on Wednesday as markets continued to rally on optimism over economies emerging from coronavirus-led shutdowns. Recent PMI data showed the Eurozone business activity contraction eased in May, while China's services sector returned to growth. DAX 30 jumped  3.8% to 12,474, its highest level since February 26th. CAC 40 added 3.5% and FTSE 100 finished 2.6% higher.
 
Investors in the US also remain optimistic over an economic recovery  from a coronavirus-led slump amid continuing social unrest in the country.  President Donald Trump's administration  banned Chinese passenger carriers from flying to the United States since June 16, putting pressure on Beijing to allow US air carriers to resume flights amid rising tensions between the two largest economies in the world.
Today's decision penalizes China for failing to comply with an existing agreement on flights between the two countries.
However market sentiment was lifted after recent data from the US pointed to a slowdown in private job shedding and in non-manufacturing output. ADP report said private employers laid off another 2.76 million workers, lesser than an expected 9 million job losses. Meanwhile Institute for Supply Management's (ISM) reading, showed that U.S. services industry activity bounced off an 11-year low in May. On the other hand, today's data still indicate that the economy is shrinking. A weak labor market will not generate consumption or greater economic activity. ISM index value below 50  indicates that purchasing managers are still concerned about the economic outlook. So one can see an improvement compare to the previous month, but in real terms the situation is still bad. It seems that investors among all these poor data are trying to find information that would indicate that the economic situation is slowly stabilizing, expecting a clear improvement in the near future. Therefore, there is a risk that when this good information finally arrives, it may lead to profit taking and the current rally could end. During today’s session Dow Jones rose 1.48%, S&P 500 gain 1.0% and Nasdaq is trading 0.5% higher. 
 
As expected, the Bank of Canada left interest rates unchanged at 0.25%. BoC reduces the frequency and volume of some market operations that aimed to provide liquidity on the market. The central bank pointed out that Canada avoided the worst case scenario presented in the April report. Still, one should expect a decline in GDP in the second quarter at a double-digit rate. The bank maintains a large asset purchase program. At the same time, BoC points to the possibility of adjusting monetary policy if necessary, but no mention has been made that interest rates could be cut further.

US crude oil stocks unexpectedly fell by 2.077 million barrels, but these figures did not cause any significant market reaction as investors' attention is focused on other issues. OPEC meeting which was scheduled for tomorrow probably will not take place and there is a good chance that it will not be held next week either. Saudi Arabia is to urge the meeting to be moved to mid-June or even to the second half of June. This was quite negative information for the oil market. Previously it was reported that Saudi Arabia and Russia decided to extend the agreement by one month. During today’s session WTI price drop  0.7 % and Brent fell 0.8 %.

Gold prices continue to decline on Wednesday. Gold futures for delivery on the Comex exchange were down 2% at $1,699.95 an ounce, while spot gold was down 1.8% at $1,697.37 an ounce. Gold is on course for its first close below $1,700 in over a month.
 
A lot is on the agenda tomorrow. ECB decision on interest rates and later press conference of the ECB president are undoubtedly the most important and may have major impact on the markets. The ECB is widely expected to say it will expand its pandemic-driven bond fund by another 500 billion euros ($560 billion). However, regular data also should be watched closely as US  jobless claims, trade balance figures from Canada and Australia will be released tomorrow.
USDCAD is trading around 1.3500 support level, its highest level since March 6th as investors turned to riskier currencies during today’s session. This support is additionally strengthen by 200 MA (redline). Should downbeat moods prevail, an downward impulse towards 1.3376 could be launched. On the other hand, once buyers regain control, the resistance at 1.3709 pts may be at risk. Source: xStation5
Share:
Back
Xtb logo

Join over 935 000 XTB Group Clients from around the world

The financial instruments we offer, especially CFDs, can be highly risky. Fractional Shares (FS) is an acquired from XTB fiduciary right to fractional parts of stocks and ETFs. FS are not a separate financial instrument. The limited corporate rights are associated with FS.
This page was not created for investors residing in Brazil. This brokerage is not authorized by the Comissão de Valores Mobiliários (CVM) or the Brazilian Central Bank (BCB). The content of this page should not be characterized as an investment offer in Brazil or for investors residing in that country.
Losses can exceed deposits

We use cookies

By clicking “Accept All”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

This group contains cookies that are necessary for our websites to work. They take part in functionalities like language preferences, traffic distribution or keeping user session. They cannot be disabled.

Cookie name
Description
SERVERID
userBranchSymbol cc 2 March 2024
test_cookie cc 25 January 2024
adobe_unique_id cc 1 March 2025
__hssc cc 8 September 2022
SESSID cc 2 March 2024
__cf_bm cc 8 September 2022
intercom-id-iojaybix cc 26 November 2024
intercom-session-iojaybix cc 8 March 2024

We use tools that let us analyze the usage of our page. Such data lets us improve the user experience of our web service.

Cookie name
Description
_gid cc 9 September 2022
_gat_UA-98728395-1 cc 8 September 2022
_gat_UA-121192761-1 cc 8 September 2022
_gcl_au cc 30 May 2024
_ga_CBPL72L2EC cc 1 March 2026
_ga cc 1 March 2026
__hstc cc 7 March 2023
__hssrc

This group of cookies is used to show you ads of topics that you are interested in. It also lets us monitor our marketing activities, it helps to measure the performance of our ads.

Cookie name
Description
MUID cc 26 March 2025
_omappvp cc 11 February 2035
_omappvs cc 1 March 2024
_uetsid cc 2 March 2024
_uetvid cc 26 March 2025
_fbp cc 30 May 2024
fr cc 7 December 2022
_ttp cc 26 March 2025
_tt_enable_cookie cc 26 March 2025
_ttp cc 26 March 2025
hubspotutk cc 7 March 2023

Cookies from this group store your preferences you gave while using the site, so that they will already be here when you visit the page after some time.

Cookie name
Description

This page uses cookies. Cookies are files stored in your browser and are used by most websites to help personalise your web experience. For more information see our Privacy Policy You can manage cookies by clicking "Settings". If you agree to our use of cookies, click "Accept all".

Change region and language
Country of residence
Language