By Deepta Bolaky
As of writing, the number of coronavirus cases worldwide has passed 9.7 million and is expected to reach 10 million by the end of this week as per the World Health Organisation. Europe and the US were among those countries that have seen a surge of COVID-19 cases since they began easing restrictions. The growing fears of a second wave of the outbreak have taken the markets on a volatile ride this week.
Risk sentiment remains fragile as investors are struggling to assess the surge in coronavirus cases and the impact on the very early stages of the global economic recovery. The flare-ups across the US, Germany, Australia, India, Indonesia and Brazil are worrisome. Stock market swung between gains and losses throughout the week as the rising virus cases dampened sentiment.
World Equity Indices
After a buoyant start to the week where major US indices were climbing higher, the sentiment has faltered mid-week due to virus concerns. Nasdaq has even hit record high earlier this week bolstered by leading PMI indicators showing a pick-up in business activities and talks of further stimulus.
On Wednesday, all major US equity benchmarks retreated significantly for the second time this month:
Similarly, the Australian share market dropped by around 2.5% on Thursday following poor leads from Wall Street. The index is poised to end the week in negative territory. As of writing, almost all sectors were in the red for the week. On Friday, the Australian share market has recovered from Thursday’s losses lifted by the gains in the US markets, but it is unlikely that the ASX200 will recover from the weekly decline.
In the forex market, the US dollar gathered strength against major currencies as virus fears gripped markets. Safe-haven currencies like the Swiss franc and Japanese Yen were the least impacted while commodity-linked currencies were among the worst performers.
Source: Bloomberg Terminal
The greenback is also finding some support on improving economic data:
The oil market has also been feeling some pressure, dragged by virus fears and weekly oil reports:
However, the oil market is finding support on surveys and data showing a pick up in activities that will fuel demand for oil. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) are consolidating around $39.15 and $41.55, respectively.
Gold rallied at the start of the week as investors sought some safety given the resurgence of virus cases. After trading around the $1,780 mark, gold retreated dragged by a stronger US dollar. As of writing, XAUUSD pair is currently trading at $1,760.
By Deepta Bolaky
|Monday, 29 June 2020
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