The conflict between the US and China is breaking out. The U.S. government openly states that China has allowed coronavirus to leak from a laboratory in Wuhan and that they have evidence of this. The current very difficult situation in the U.S. markets is aggravated by another round of trade war.
Monday was again negative for stock markets. The DAX index lost quite a lot, 3.6% due to investors’ fears about a new trading war between China and the USA. American indices closed in the opening area. Quarantine and closed productions in Europe do not give clarity to investors. Equity markets will remain volatile as investors are looking for a balance between economic statistics, weakening quarantine measures and new vaccines to treat coronavirus. Probably, the U.S. stock market will follow the statements of politicians very closely. Many analysts are tending to fall, as the economy is still very far from recovery from the crisis.
The Euro bounced back from 1.0970 on Monday. The situation in Europe is critical, so the strong growth is not worth thinking about yet. Now many companies will be flooded with huge money just to save them from bankruptcy. All the attention this week will still be focused on Friday and on the US unemployment applications. So far, the euro is forming a side channel where one can try to work from borders.
Monday was positive for gold. Due to the decline in the stock market, the precious metal is popular again. Gold passes the level of $1700 per ounce and goes to the upper limit of the $1730 range. To go higher, you need a strong momentum, which is likely to be on the important news. After fixing above 1730$, it will be possible to look at the exit to the level of $1800 per ounce, where the next strong resistance is located.
It seems that the measures taken by different countries to contain the price of oil are beginning to work. On Monday the price of a barrel of WTI oil is rising to the level of $22.2. On May 5, the Texas Commission will hold a meeting to vote on the reduction of oil production. The price is now looking for a balance between supply and demand. Traders expect gradual withdrawal of countries from quarantine, which in turn should spur the demand for oil. One problem is that this withdrawal process is very slow.
What’s waiting for us today?
06.30 Decision on interest rate in Australia
09.55 UK PMI Composite Index for April.
16.00 Supply managers index for the US non-production sector
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