News & Analysis

Overnight on Wall Street: Wednesday 20 May 2020

May 20, 2020

By Deepta Bolaky
@DeeptaGOMarkets

Equity Markets

The vaccine optimism faded overnight as investors are focusing on the struggles of reopening economies and the precautions in place to contain the spread of the virus while also questioning the results of Moderna’s study. Market participants also took note of the blunt warning of the International Monetary Fund (IMF) to world governments against allowing the pandemic to be the reason for protectionism. 

Global equities slipped across the board driven by a combination of virus-related updates and geopolitical tensions. European bourses ended the session on a mixed note while Wall Street ended fell significantly in the final hour of trading. 

All major US equity benchmarks ended in negative territory, but the heavy-tech index held better compared to the S&P500 and the Dow Jones Average Industrial.

  • Dow Jones Average Industrial lost 391 points or 1.6% to 24,207.
  • S&P500 fell by 31 points or 1.1% to 2,923.
  • Nasdaq Composite 50 points or 0.54% to 9,185.

World Equity Indices (% Chart)


Source: Bloomberg

Currency Markets

In the FX space, major currencies were mixed against the US dollar in the European and US session. The greenback recovered some ground after Monday’s sell-off but failed to rally significantly against its peers despite a deterioration in risk sentiment. 

The immediate attention was on the shared currency after Germany and France propose a $545 billion coronavirus fund for Europe. After China pledged a $2 billion fund to fight COVID-19, both leaders of the Eurozone unveiled a “one-off” borrowing plan to help Europe’s mostly-hit countries. The EURUSD pair rose above the 1.09 level. 

EURUSD (Hourly Chart)


Source: GO MT4

On the economic front, the UK employment reports were among the main events in the European session. Recently, the Sterling has come under pressure following the BoE’s stance on negative interest rates and the preparations for a no-deal Brexit. The jobs report has been mixed:

  • Claimant Count jumped by 856.5k, much higher than the 150k that was forecasted. 
  • ILO Unemployment rate dropped from 4% to 3.9%, which came below the 4.4% expected.

The GBPUSD pair rose from 1.21 level to 1.22 level. 

GBPUSD (Daily Chart)


Source: GO MT4

Commodities

The oil market is finding support from a combination of production cuts, buoyant inventory reports, and the prospects of increasing demand. The American Petroleum Institute reported that the US weekly crude oil stock declined to -4.8 million barrels in May 15 from previous 7.6 million. The weekly oil reports continue to show a decrease in inventories of crude oil stock which will ease fears of storage problems. 

Crude oil futures struggled to edge higher despite the draw in the inventories. As of writing, WTI Crude oil (Nymex) is currently trading 2.1% higher at $32.50 while Brent Crude (ICE) is trading at 34.65, down by 0.46%. The EIA report will be eyed for fresh trading impetus. 

Gold

Amid the reopening confusion, uncertainties and geopolitical tensions, the precious metal are finding buyers. After surging to more than 7-year high, the gold struggled to push higher following the results announcement of the Phase 1 trial by Moderna Inc. As of writing, the XAUUSD pair is currently trading in a tight range around the $1,745.

XAUUSD (Daily Chart)


Source: GO MT4

By Deepta Bolaky
 @DeeptaGOMarkets

Key upcoming events

  • RBA Meeting Minutes
  • Industrial Production (Japan)
  • Claimant Count Change, ILO Unemployment Rate, Average Earnings (UK)
  • EcoFin Meeting and ZEW Survey – Economic Sentiment (Eurozone)
  • ZEW Survey – Current Situation and Economic Sentiment (Germany)
  • Building Permits and Housing Starts (US)
  • GDT Price Index (New Zealand)

 

Thursday, 21 May 2020 
Indicative Index Dividends
Dividends are in Points
ASX200WS30US500US2000NDX100CAC40STOXX50
0.13710.0820.2030.1050.05402.409
ESP35ITA40FTSE100DAX30HK50JP225INDIA50
003.6270000


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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