The new trading week of May started with a positive attitude. Several good news made investors to buy. First, the coronavirus cure is almost ready. The American company Moderna confirmed that the tests were successful. Secondly, investors were encouraged by the fact that the U.S. government has taken a package of measures by 3 trillion dollars to save the economy.
The third good news was Merkel and Macron’s agreement to create a 500 billion euro fund to stimulate the European economy. Such positive news hasn’t happened in a long time. On Monday, growth was going on in all directions. DAX added 5.6%, S&P500 added more than 3% and came close to 3000. The upward trend is likely to continue, but it is worth considering that this is a very fragile market which now depends only on good news.
The Euro reacted perfectly to the news about the agreement between France and Germany on the establishment of a 500 billion recovery fund. In addition, due to the weakening of the dollar, the European currency showed an excellent growth of almost 150 points. Although the growth is large, the price still remains inside the channel, which has been in place since late March. The border at 1.0960 will be another milestone to go up. If it doesn’t succeed, the sideways trend will continue.
The price of oil continues to rise steadily. Such demand emerged after analytical companies said that exporters, Saudi Arabia in particular, had cut production dramatically since early May. June futures on WTI oil expire today, and it will not repeat the story of its predecessor, which went down to minus $37 per barrel. WTI oil broke through the level of $30 on Monday and grew steadily further.
Monday turned out to be omnidirectional for gold. On the one hand, gold updated its seven-year high of $1775.40 per ounce, but on the other hand, the price went down to $1730 on investors’ appetite for risk. Excellent news on the COVID-19 drug testing made investors withdraw from the assets. In the near future gold will probably lose some of its positions, but the test of $1800 level is inevitable. Still, a lot of money is being filled into the markets and nobody has cancelled the second wave of the epidemic yet.
What’s waiting for us today?
08.00 Change in the number of jobless claims in the UK.
11.00 ZEW Economic Sentiment Index in Germany
14.30 Number of construction permits issued in the United States
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