By Deepta Bolaky
Investors weighed the geopolitical tensions and standoff by the US Congress against the improving economic data while still monitoring the spread of the outbreak. While there were early signs of a slowdown in the number of daily coronavirus cases in the US, we are seeing more clusters in other countries.
As the week comes to an end, investors mulled over the US-China trade deal talks scheduled for this weekend.
The improvement in the economic data continues to provide support to the stock market despite the mounting number of COVID-19 cases. Global stocks erased all of its 2020 losses on the back of the amount of stimulus being injected in the pandemic-induced economy.
Major US equity indices flirted near record highs levels this week driven by the outperformance of mega-cap tech stocks. The US share market is showing strong resilience despite the looming recession and a pandemic with no immediate end in sight. Ahead of the US election which will take place in less than 3 months, investors will likely eye the stimulus relief package.
Asian shares also managed to erase all of the losses fueled by the pandemic. MSCI Asia Pacific Index rose to the 2019 closing level.
In the forex market, major currencies were mixed against the US dollar. The greenback attempted to regain some momentum but was dragged by concerns over the mounting number of infections, uncertainty around the next round of stimulus package and escalating tensions between the US and China.
Source: Bloomberg Terminal
The New Zealand dollar emerged as the worst-performing currency dragged by a dovish RBNZ, new coronavirus cases in Auckland, and downbeat China macro data. On the economic front, data was mixed across the board:
Crude oil futures are poised for a weekly gain lifted by the broad optimism, and bullish EIA and API reports that showed a decline in crude oil inventory stock. The oil market ignored the pessimistic IEA report which revised down both their 2020 and 2021 forecasts. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading higher at $42.41 and $45.16, respectively following the turnaround in risk sentiment.
Gold plunged from recent record highs and slipped the most in seven years. As of writing, the XAUUSD pair is currently consolidating around the $1,950 mark. A peak or a temporary retracement? The positive vaccine updates and the broad optimism have sent gold tumbling on earlier this week. After a great run to the upside, some correction was inevitable. Bulls and bears are to monitor the support levels for fresh trading impetus.
By Deepta Bolaky
|Monday, 17 August 2020
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