Market Commentary - July 9, 2020
USD saw broad pressure Wednesday. Equities saw gains. Wednesday brings no positive news on the Covid front, with daily highs continuing to be surpassed. Asian stocks trade higher.
UK finance minister Rishi Sunak has revealed another GBP 30 billion of stimulus is to be spend on jobs. A Job Retention Bonus will be deployed to help keep furloughed workers afloat.
Focus remains on the US-China tensions as we saw earlier this week. "For the first time in six years, two US Navy aircraft carriers are in the South China Sea, the latest show of military might from Washington as it pushes back against China's sweeping claim to much of the contested region," CNN reported.
Figure 1 (Source: Refinitiv Eikon): XAU breaks the 1800 barrier and advances higher, only the all-time high of $1,921 is left to beat now.
Investors pile into Gold as global outlook continues to look bleak with resurging Coronavirus cases worldwide and interest rates seemingly nailed to the floor. Both a safe-haven asset and a hedge against inflation, prevailing circumstances have propelled the precious metal beyond $1,800 per oz, just ~$100 short from historic highs.
- WHO confirmed that there is “emerging evidence” of airborne spread of the coronavirus. The rising cases worldwide bring into concern about the economic recovery.
- Crude Oil Inventories rebounds from -7.2M to 5.7M, which is much better than the forecast -3.2M. Oil inventories is above the five-year average for the time of the year. Oil prices rises have been limited over the last week. Pressured by the increasing number of coronavirus cases, it would reduce the oil demand so it may take a long time for the recovery.
- Nasdaq hit a record high, supported by tech shares an early sign of an economic recovery, which offset the concern about further lockdowns due to increasing number of coronavirus across countries.
Finance ministers from 19 nations will meet in Brussels today to appoint a new President for the Eurogroup. Current frontrunner, Spanish minister Nadia Calvino, has full support from Germanys’ Angela Merkel- if confirmed will be the first women to chair the group. Previous policy discussions illustrated blueprints for fiscal austerity, risk reduction and national responsibilities. Expectations rise for a shift in policy with the Euro zone plunged knee deep in economic turmoil. More so, with EU members states in discussion proposing and implementing a soon to be mammoth stimulus package funded by wealthier states.
- Declines in US unemployment claims seen stalling as market consensus sees figures at 1375K from 1427K.
- Canadian housing starts remaining resilient expected to post 185K.
- With producers slowly curbing production, natural gas storage set to steadily declines to 60B from 65B
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Topics: Market Commentary