Daily summary: Global stocks rally as risk-on sentiment prevails

5:29 PM 26 May 2020
• European Stocks Rally, S&P 500 above 3000 pts
• More countries continue to reopen their economies
• Novavax  (NVAX.US) started the first human study of its experimental coronavirus vaccine.

 European indices finished today’s session in green amid renewed optimism about the global economy as more countries eased coronavirus restrictive measures. Japan lifted its state of emergency after a marked fall in new coronavirus cases in Tokyo and other hard-hit regions. In Europe, Spain, one of the most affected countries, will reopen its borders for tourists from July 1 with no quarantine, while Germany could lift all travel restrictions in Europe by mid-June. In the England all non-essential retailers will resume activities from June 15. Also investors welcomed the news of a potential vaccine to treat COVID-19 from American biotech company Novavax (NVAX.US). Signs of stimulus to support the Eurozone economy also lifted investors' mood ahead of an EU meeting as soon as June as policymakers are set to agree on a common recovery plan. 
 
These positive news completely overshadowed growing tensions between the US and China and escalation of conflict between US and Iran and Venezuela.  The conflict with Venezuela intensified after second Iranian vessel carrying fuel had entered Venezuelan waters despite US criticism as both countries are under US sanctions.
 
Also, it seems that investors have stopped paying attention to the growing number of new cases of coronavirus and completely ignored WHO warnings of a second peak – not necessarily a second wave – of coronavirus cases. Yesterday Dr. Mike Ryan, executive director of WHO’s Health Emergencies Programme, announced that at the moment, we are “right in the middle of the first wave, globally."
“We're still very much in a phase where the disease is actually on the way up," he added.
“We need to be also cognizant of the fact that the disease can jump up at any time. We cannot make assumptions that just because the disease is on the way down now that it's going to keep going down, and the way to get a number of months to get ready for a second wave – we may get a second peak in this way,” Ryan said.

Wall Street resume trading  after the long weekend and today major US indexes followed their European counterparts.  S&P 500 managed to break above the key psychological level of 3,000 pts  for the first time since the beginning of March. However recent statement of White House adviser Larry Kudlow weighed slightly on market sentiment and S&P 500 fell from session highs. Kudlow announced that President Trump was "so miffed with China on virus and other matters that the trade deal is not as important to him as it once was".  During today's session  S&P 500 rose 1.83 %, Dow Jones jumped 2.59% and Nasdaq is trading 0.96% higher. In Europe - DAX added 1.2 % to 11,529, its highest level since March 6th., CAC 40 gained 1.5 % and FTSE 100 finished 1.2 %.

Bank of Canada Governor Poloz, who is expected to leave the chair next week, said that the significant monetary stimulus will be needed in order to help the economy to recover from the coronavirus crisis. Poloz added that the deflationary risks associated with the pandemic and lockdowns are more concerning than the potential build up of inflationary pressures due to the measures taken by policymakers.
 
Spot gold fell more than 1.0% to below $ 1,710 an ounce on Tuesday, as investors jumped to risky assets. WTI oil erased some of the gains and is trading around $ 34 a barrel, as geopolitical tensions and economic uncertainties weigh on sentiment. Earlier in the session price tested resistance at $ 34.81 per barrel. Russia announced that its oil production reached  its target of 8.5 million barrels per day for May and June, in compliance with its OPEC + agreement. Also, the International Energy Agency executive director said oil consumption hasn't yet peaked and demand will likely grow to past pre-pandemic levels.

Tomorrow's economic calendar is quite light with API Weekly Crude Oil Stock being the only noteworthy reading scheduled for release. Also ECB's President Lagarde is scheduled to speech during the early hours of the European session.
The first quarter earnings season is continuing to wind down. Many retailers will post their quarterly results this week. Costco (COST.US), Dollar General (DG.US), Nordstrom (JWN.US), Ulta Beauty (ULTA.US) and Burlington Stores (BURL.US) are among some of the companies reporting earnings. 
USDCAD - The Canadian dollar appreciated during today’s session and price managed to break below key support level at  1.3900. If current risk -on sentiment prevails, then next support at 1.3709 may come into play. Source: xStation
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