Daily summary: Global stock rally stalls

7:36 PM November 25, 2020
  • European equities little-changed at 9-month highs
  • US Weekly Jobless Claims higher than expected
  • US crude stockpiles fall unexpectedly
European indices ended mixed in a volatile session on Wednesday as investors booked profits following sharp gains earlier this month. Meanwhile, the ECB has warned in its latest financial stability review that European banks will not see profits return to pre-pandemic levels before 2022. UK's finance minister Rishi Sunak announced there was set to be a £394 billion budget deficit for the year and 11.3% decline in GDP as the economy was battered by the virus. Meanwhile  infections continued to rise across the continent although some countries like France, UK and Italy showed signs of improvement.
 
Mixed moods can also be spotted on the US markets ahead of the Thanksgiving holiday. Weaker than expected claims report overshadowed recent optimism over a coronavirus vaccine and an orderly transition of power. The Labor Department's report showed initial claims last week increased to 778k from 748k in the prior week, above analysts' forecasts of 730K. This might be a sign that surging number of new COVID-19 infections and further restrictions introduced in many states were boosting layoffs and undermining the labor market recovery. Rest of today's macroeconomic data was more positive - spending increased slightly more than anticipated, new home sales remained strong, GDP growth was confirmed at a record 33.1% in Q3 and durable goods orders came above market expectations. Publication of the FOMC minutes did not bring much surprise. On the coronavirus front, US recorded over 175K new cases on Tuesday and hospitalizations surpassed 88K which is a new record. Texas reported a record number of new infections and California officials warned that daily death toll could reach new record by Christmas.

US crude futures are trading more than 2.4% higher, while the international benchmark Brent contract rose over 2.0%. EIA report showed US crude inventories fell by 754k barrels in the latest week, beating analysts’ forecasts of a 127k rise and compared to a 3.8 million barrels increase reported by API yesterday. From Monday gold fell nearly 3% and declines could deepen if risk-appetite increases. Meanwhile, China's net gold imports via Hong Kong plunged around 84% in October, the biggest decline since June. Silver futures are trading 0.4% higher.
USDCHF – pair bounced off the downward trendline during today’s session and is currently testing major support at 0.9080. If sellers manage to break below it, then declines could deepen. Next support lies at 0.9031. However if buyers will manage to halt declines here, then another upward impulse towards resistance at 0.9140 could be launched. Source: xStation5
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