Monday turned out to be a shock for the world markets due to falling to zero prices for WTI oil in May. The sharp decline explains that things are not so good in the economy and recession can only gain momentum. The coronavirus incidence curve in major regions seems to have entered the plateau stage, which in turn inspires some optimism among investors.
Many analysts believe that we will feel the result of quarantine, production stoppage and economic recovery only in a few months. This has never happened in the world before, so no one knows what consequences the current situation will have. On Monday, markets are traded in mixed motion due to the great uncertainty in the oil market. DAX is up 0.3%, S&P500 is down 2%. The main data this week will be the initial claims for unemployment benefits in the USA, as well as orders for durable goods. The positive data will give investors an impulse to buy assets from the current levels.
The EU, like the debt markets of the European Union, pursues a fear of sovereign debt crisis. Italy is currently one of the most volatile countries, which is already closely supported by the ECB. The focus will be on the EU Leaders Summit, to be held on Thursday. It will once again discuss methods to save Europe’s economy. Depending on whether the leaders of European countries will be able to agree and join forces, the future fate of the Euro depends. Italy’s refusal to adopt stabilization policy may affect its credit rating on Friday, which in turn will negatively affect the price of the European currency. While the pair EUR/USD trades in a narrow range near the level of 1.0860 and is likely to stay there until the announcement of the summit results.
The May futures for WTI oil was traded at $0 per barrel. Markets have made it clear that nobody needs oil now. Storages are overflowing, production is declining slowly, and the US government plans to take a number of measures in the near future, which are already being discussed in the administration. The future of oil is still very bad and it is likely that the June contract, which is already considered the main one on the stock exchanges, will also slide down in the near future.
On Monday, gold keeps trying to go above $1700. The oil market supports the precious metal, so in the near future we expect gold to try to reach $1750 per ounce. Paralyzed economic processes around the world will not be able to resume in the shortest possible time, even if a cure for coronavirus is found, so the demand for gold will be just as high in the near future.
What’s waiting for us today?
00.45 Changes in the number of initial UK unemployment applications for March
11.00 ZEW Economic Sentiment Index in Germany
16.00 Aftermarket housing sales in the US
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