Daily summary: Panic returns to the Global Financial Markets

6:35 PM April 21, 2020
• WTI oil dropped 45% today
• US stocks extended losses
• European indices finished in red

US crude prices continued to plunge on storage concerns. Today WTI crude futures contract for May dropped below zero for the first time in history while the June contract dropped as much as 45% below $ 11.46 a barrel as investors worried that spreading coronavirus pandemic will continue to hurt demand. Analysts estimate that because of  the stay-at-home restrictions and business closures due to the pandemic,  oil demand have fallen by 30%. Saudi Arabia announced it ready to take further actions together with other major oil producers to achieve oil market stability.

Global equity markets extended yesterday losses amid a slump in oil prices. European leaders are scheduled for  a video meeting on Thursday to discuss budgetary measures and work on ways to finance economic recovery from the pandemic. However, financial markets do not expect that final decisions will be made during the meeting. Yesterday Chancellor Angela Merkel said that Germany ready to commit to a bigger EU budget and to the issuance of joint debt via the Commission. European indices finished today’s session lower. DAX 30 dropped 3.9 % lower, CAC 40 % declined 3.8 % and FTSE 100 fell 3.0 %.

Although Donald Trump has assured that the US government will help oil companies, US stock indices are continuing to fall. After the presidential tweet, the market rebounded temporarily, but later sell-off gained momentum. Donald Trump said he will sign an Executive Order to suspend immigration into the United States.
 Later on US goverment provided more details regarding the next round of federal support for mall businesses.  According to CNBC, the bill will provide $ 250 billion more for the Paycheck Protection Program (PPP), there will be $ 60 billion for disaster relief for the Small Business Administration, $ 60 billion for banks with under $ 50 billion in assets, $ 75 billion for hospitals and $ 25 billion for testing for Covid-19.
Currently, the main indexes across the Atlantic are trading under pressure. Dow Jones dropped 2.43 %, S&P500 fell 2.85 % and NASDAQ is trading 3.26 % lower. On the earnings front, Coca-Cola earnings came above expectations and Netflix will release results after the market close.

The price of gold dropped more than 1% to around $1,660 per ounce today as demand for the US dollar increased. In normal times gold would rally alongside side other safe heaven assets like the US dollar, the Japanese Yen and the Swiss Franc. However, taking into account the recent events that took place in the markets, it should be assumed that these are not normal times and investors should be prepared for further unexpected market behavior.

Tomorrow investors will be served CPI readings from UK and Canada. In the afternoon US crude oil inventories will be published. On the earnings front AT&T Inc, T-Mobile US Inc., Biogen Inc., Delta Airlines Inc. will report their quarterly results.
Gold has fallen back from its recent multi-year high of $ 1,747 / oz and broke below the supportive trendline which is acting as a resistance now. Today price found some support around $1661.32/oz. If sellers will manage to break belows this level then next support located at $1633.82/oz may come into play. Break above $1700/oz will invalidate the bearish scenario. Source: xStation5

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