Daily summary: Global stocks rise in volatile session

European indices finished today's session higher as investors welcomed the news, that the European Commission proposed a bigger-than-expected €750 billion Recovery Fund Plan, including €500 billion in grants and €250 billion in loans, to support countries and sectors which are most affected by the coronavirus. The European Commission is planning borrow these funds and then disburse them via the European budget — the EU’s common basket of cash that supports programs such as Erasmus. They will be repaid between 2028 and 2058. However, Austria, Netherlands, Sweden and Denmark still  oppose issuing grants as a way to mitigate the economic fallout from the Covid-19 crisis. These four countries would prefer  loans that would have to be repaid and also want strong economic reform commitments in return for any financial help. Still the plan has to be approved by all EU member states and requires ratification by national parliaments. European Commission proposed introduction of a carbon border duty, a common consolidated corporate tax base and a digital tax in order to cover some of the additional expenses.
Meanwhile, the ECB President Christine Lagarde said the Euro Area economy will most likely shrink between 8% and 12% this year.

During today’s session DAX 30 advanced 1.3%, CAC 40 added 1.4 % and FTSE 100 finished 1.3 % higher.

Wall Street swings between gains as losses as technology stocks drop. Early in the US trading session  Nasdaq Composite dropped 0.8% as Facebook, Amazon, Microsoft which have led a recent rally, were down more than 2%. Apple, Netflix and Alphabet all slid at least 0.3%. Twitter stock dropped 4.7%, after President Trump threatened to shutter social media companies after Twitter encouraged readers to fact check his tweets. Also mounting US-China tensions weighed on market sentiment. According to Bloomberg, Trump administration might implement sanctions on Chinese officials and firms to punish Beijing for the Hong Kong security law. US secretary of state Mike Pompeo declared today that Hong-Kong is no longer autonomous from China. "Today, I reported to Congress that Hong Kong is no longer autonomous from China, given facts on the ground. The United States stands with the people of Hong Kong." "No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China," "It is now clear that China is modeling Hong Kong after itself." said Mike Pompeo. The certification to Congress means that Hong Kong doesn't deserve special treatment under US law, which will badly damage its trading status. Also  President Trump said the US was working on a strong response to China. Despite these negative news Dow Jones managed to climb  over 1,0 %, S&P 500 rose 0.34% and Nasdaq managed to erase some of the early losses and  is trading 0.40% lower.

 

Reuters reported that Japan will introduce further $1.1 trillion stimulus package in order to provide financial support for struggling companies, subsidies to help firms pay rent and several trillion yen for health care assistance and support for local economies. The stimulus, which will be funded partly by a second extra budget, will be on top of a $1.1 trillion package already launched last month, bringing the total amount of JPY 234 trillion, roughly 40% of Japan's GDP.  However in analysts opinion, Japan's GDP will shrink by more than 20% this quarter and the recovery could take significant amount of time as exports, tourism and business investment will find it hard to return to the pre-pandemic levels.

Gold extended its decline during today's trading session. Earlier in the day, spot gold dropped 1% and was trading below $1,700 to a two-week low of $1,693.90. Gold futures for June delivery also dropped by 0.6% to $1,695.60. However in the late afternoon gold managed to recover some of the earlier losses and return above $ 1700 / oz. Some analysts still believe that the outlook remains positive for gold during these times of political and economic uncertainty. “It’s very important for gold prices to stay above $1,700. Otherwise, if the price correction continues, speculative investors are likely to leave this boat and increase pressure on prices,” Commerzbank analyst Eugen Weinberg said in an interview with CNBC.

 

A lot of macroeconomics reports from the US will be released on Thursday. Unemployment claims, Durable Goods Orders and Prelim GDP q/q  are key readings scheduled for tomorrow. Apart from that, investors will get to know Private Capital Expenditure  from Australia and  Germanys’  Inflation Rate YoY. Oil traders will be looking at EIA Crude Oil Inventories report.