News & Analysis

Overnight on Wall Street: Wednesday 05/02/2020

February 5, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Wall Street rebounded strongly on Tuesday. The PBOC’s moves to shore its economy from the potential adverse impact of the outbreak are reassuring investors. China’s swift response has been widely praised by the WHO. It is the largest mass quarantine with 50 million people being locked down in more than 10 cities.

  • Dow Jones Average Industrial added 408 points to finish at 28,808.
  • S&P500 ended 1.5% higher at 3,298.
  • Nasdaq Composite added 2.1% to close at 9,468.

The earnings season and upbeat economic data are also supporting the stock market rally.

Currency Markets

In the FX market, risk sentiment has improved following the liquidity injections from the PBOC. Major currencies were mixed against the US dollar.

US Dollar Index

The upbeat data in the manufacturing industry at the start of the week helped the greenback to recover from Friday’s sell-off. As traders keep monitoring the indicators of the US economic health, a rise in factory orders helped the US dollar index to consolidate gains.

US Dollar Index (Daily Chart)


Source: GO MT4

AUDUSD

As widely expected, the RBA kept interest rate unchanged at 0.75% as the recent economic indicators gave been slightly better than expected. However, the fact that the RBA expects the bushfires and the coronavirus outbreak to have only temporary effects on domestic growth boosted the local currency.

The Aussie dollar traded higher despite a stronger greenback.

AUDUSD (Hourly Chart)


Source: GO MT4

Commodities

Despite hopes of deeper oil cuts or extension, oil prices were unable to sustain an earlier rebound. The API weekly report shows a larger-than-expected crude oil inventory build of 4.18 million barrels for the week ending January 31.

WTI and Brent Crude fell to its lowest level in more than a year as demand growth fears continue to weigh on oil prices. As of writing, WTI and Brent Crude are trading in the vicinity of $49 and $53 respectively.

USOUSD and UKOUSD (Daily Chart)


Source: GO MT4

Gold retreated from recent highs but remains in the elevated levels at around $1,553 despite a strong US dollar and a significant rebound in the stock market.

The precious metal is holding on to gains as risk sentiment remains fragile.

XAUUSD (Hourly Chart)


Source: GO MT5

Key Upcoming Events

Governor Lowe Speech (Australia)
Caixin Services PMI (China)
SECO Consumer Climate (Switzerland)
Markit PMI Composite (Germany)
Markit PMI Composite and Retail Sales (Eurozone)
Markit Services PMI (UK)
ADP Employment Change, Trade Balance, Markit Composite & Services PMI and ISM Non-Manufacturing PMI (US)
International Merchandise Trade and BoC’s Wilkins Speech (Canada)

Thursday, 6th February 2020
Indicative Index Dividends
Dividends are in Points
ASX200WS30US500US2000NDX100CAC40STOXX50
02.2380.560.1421.70604.346
ESP35ITA40FTSE100DAX30HK50JP225INDIA50
000.4820000

Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs.  Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.

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