Daily summary: Mixed moods on global stock markets

European shares give up part of yesterday's profits. On Monday, Berlin and Paris agreed on the creation of a 500 billion euro recovery fund to support the countries most affected by the coronavirus pandemic. This plan requires the approval of all 27 EU members. However Austrian Chancellor Sebastian Kurz said he had discussed this idea with his Danish, Dutch and Swedish counterparts and continued to oppose the transfer of money to other countries in the form of subsidies.
 "We are sceptical," Kurz, was quoted as saying in the Oberoesterreichische Nachrichten newspaper. "Our position is clear: we want to show solidarity with states that were hit particularly hard by the crisis but we believe that loans are the right way, not grants."
"In the coming days we will present a proposal with our own ideas. We believe it is possible to stimulate the European economy and yet avoid a mutualisation of debt," he said.

UK government announced a new tariff regime, known as UK Global Tariff (UKGT), to replace the European Union's Common External Tariff from January 2021. Under the new regime, Britain will maintain tariffs on a number of products backing UK industries such as agriculture, automotive and fishing, but will cut levies on £30 billion worth of supply chain imports. Recent data showed the number of people claiming unemployment benefits in Britain rose by the most on record to the highest level since 1996 in April, while first-quarter labor productivity posted the biggest quarter-on-quarter decline in 46 years. Dax finished today’s session 0.2 % higher, CAC 40 lost 0.9 % and FTSE dropped 0.8%

US indices are trading mixed  amid hopes of a potential coronavirus vaccine after Moderna’s phase 1 Covid-19 trial produced positive antibody responses in all 45 human volunteers tested. Investors also digest  Fed Chair Powell and Treasury Secretary Mnuchin virtual testimony before the Senate Committee on Banking, Housing, and Urban Affairs which took place today. Chairman Powell reassured that the central bank is ready to use all its tools to help the US economy to recover, while Mnuchin confirmed that  is planning to use all of the $500 billion that Congress provided for lending programs at the Fed.
Powell said the scope and speed of the downturn “are without modern precedent and are significantly worse than any recession since World War II.”

 

The Fed is still trying to launch four of the nine facilities, including one aimed at Main Street that will buy bank loans extended to mid-size businesses. The facility is one of the riskiest and most challenging programs the Fed has undertaken given the diversity of businesses that are likely to borrow.

On the earnings front, Walmart reported better than expected figures while Home Depot results came in below expectations. "Home Depot's earnings report shows we shouldn't assume businesses deemed essential with a strong online presence are entirely immune from the effects of the virus," said Mike Loewengart, managing director of investment strategy at E*TRADE Financial Corp. During today’s session Dow Jones lost 0.39 %, S&P 500 is trading flat and Nasdaq rose 0.86%.

Oil prices fell  today, although both WTI and Brent managed to stay above the $30 per barrel. Stronger upward movement is visible on the silver market. The price of this metal is currently rising by about 2.50% and it is possible that in the near future we will see a potential attack on the round $18 /oz level. Meanwhile, the price of gold is strengthening, along with slightly weakening US dollar.

Some noteworthy data reports will be released tomorrow. During the Asian session investors will get to know PBoC Interest Rate Decision. Inflation data from the UK and Euro Area will be the key releases of the European session while CPI readings from Canada and FOMC minutes will be on watch during US trading hours. Apart from that, oil traders will be looking at EIA Cushing Crude Oil Stocks Change.