How ambiguous the markets behave in times of general uncertainty. The US registered the highest number of coronavirus deaths on Tuesday, but the markets continue to grow in a consecutive session. Investors are probably full of optimism and believe that the government will soon win the pandemic.
The situation in the markets is such that investors no longer have to follow official statements about the pandemic and the general economic situation. Markets no longer respond to statistics, to various intermediate data, but listen only to people. On such statements in the U.S., the S&P500 and DOW indices are growing by more than 3% on Wednesday. Europe’s economy, which has experienced the worst downturn in the last 20 years, cannot grow so fast on hearing. The DAX closed at minus 0.23%, but futures show that the index is pulling up.
The European Group failed to agree on measures to support the EU economy. The disagreements between the Netherlands and Italy were in the focus of negotiations and in 19 hours of online meeting the countries could not reach an agreement. All this does not have a good effect on the euro, because in the current situation every hour and day is very important for European business. During quarantine, countries lose up to 10% of GDP, which is a very significant amount that will have to be recovered for more than a year. So far, the only support for the Euro remains the ECB, which is trying with all its might to hold rates and the economy. So far the Euro is at 1.0860 against the dollar. No growth can be expected without positive decisions from the European Commission.
The OPEC+ meeting is today. It will take place in a new format online. The parties will once again discuss the reduction of oil production in the conditions of collapsed prices. It is already clear that the decision to reduce production will have to be taken by all the negotiators. Although the U.S. has already announced that it will act in its own way and will not participate in the meeting, this time about 12 other exporting countries were invited to the meeting. So far WTI oil is traded at $29 per barrel. Today will show where the movement will be until the end of the trading week.
Gold is practically not affected by macroeconomic data. The precious metal corrected slightly on Wednesday, but it was worth waiting for after the futures on Tuesday broke through the level of $1700 per ounce. On the whole, the gold is not bad. As a safe haven, it is behaving very well and in the near future it is likely to go again to the level of $1700 per ounce. There are no signals for falling at all, so only growth.
What’s waiting for us today?
08.00 UK GDP
13.30 ECB monetary policy minutes
14.30 Net initial US unemployment claims
14.30 Changes in employment in Canada
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