Countries are weakening quarantine measures. Will the volatility increase?

By 05/05/2020News
Morning Stock News

Gold   1693,50
(-0,46%)

EURUSD   1,0907
( +0,07%)

DJIA  24115
(+2,33%)

OIL.WTI  25,095
(+6,88%)

DAX   10609
(+0,18%)

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.


DAX

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.


Euro

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.


Gold

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.


Oil

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


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.