In Europe and the United States, the number of deaths from coronavirus infection is steadily declining. Countries are beginning to emerge from quarantine and launch their economies. Such actions lead to an inevitable increase in demand for risk assets, and we see appetite growing on all stock exchanges.
Overall, the markets are starting to feel good. Investors are already trying to plan their activities, although there are sharp statements from the U.S. to China, as well as possible details about the origin of the coronavirus. On Tuesday, American markets have grown quite well. The S&P 500 came back to 3000 and added 1.9%, the DOW rose by 1.5%. The European market showed excellent positive dynamics. The DAX closed at 10729, adding 2.51%. Europe is feeling the spirit of recovery and this is very positive for the general condition. The Europeans are trying to get out of quarantine faster, to continue living and making money.
On Tuesday, after the Supreme Court of Germany approved ECB bond purchases as part of the quantitative stimulus, EUR/USD quotes increased volatility sharply and went down. The ECB has allocated huge amounts of money to stimulate the economy. Its asset portfolio has grown by 40% since 2014. Even though Christine Lagarde said that the economy is beginning to recover very slowly, there are still very strong concerns about the second wave of diseases, which may put the European Union into recession even further. In the near future, the Euro has no chance to withstand the strong US dollar. Probably, the pair EUR/USD will be looking for support at the level of 1.0760, which it could not pass in late April.
GBP continued its decline on Tuesday after the unsuccessful high on April 30 and traded at 1.2430. So far, all the focus is on the meeting of the Bank of England, which may hint that it will continue to support the economy with all its might. The whole of 2019, even if you do not take into account the pandemic, was not very successful for England in terms of retail sales. It was all the fault of reduced consumer spending. The announcement of a new QE, which is more likely the Bank of England will do, will be a negative factor for the pound.
The oil market is coming to life very quickly. A sufficient number of speculators are coming in now to make money in a collapsed market, but a number of factors, such as declining reserves and declining production in a number of countries, show that, overall, the market is not going to give up. On Wednesday, we are waiting for the data on oil reserves in the U.S., from which traders will be repelled in the near future. On Tuesday, WTI oil rose by almost 20% to $24.4 per barrel.
What’s waiting for us today?
10.30 UK Construction Business Index
14.30 Change in non-agricultural employment in the USA
16.30 US crude oil reserves
16.00 US Purchasing Managers Index for Non-productive Industries
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