On Thursday the data on GDP in the USA for the 2nd quarter of 2020 were released. Gross domestic product decreased by 32.9%. This was not even the case during the Great Depression 100 years ago. Yes, many expect the situation to improve in the 3rd quarter. Or maybe not, because the coronavirus epidemic in the United States is still gaining momentum.
At the same time, American stock indices do not pay any attention to the negative. There is too much free money in the market, which simply there is nowhere to invest. Any assets are expensive.
What happens if a large investor wants to sell a lot of shares? He sells them, the price goes down a bit. Immediately, other investors with money buy back these shares for one simple reason. They become a little cheaper and that’s good. And the investor who has sold shares is sitting on the money and does not understand what to do with them next.
Yellow metal is around 1950-1960 dollars per troy ounce. Bears got a break before they break through the $2,000 level. There’s gonna be a lot of stops behind it again. Everyone understands that this level will soon be passed.
The European currency has confidently overcome the level of 1.18. As we wrote last week, everyone is already looking at 1.20 on the pair EUR/USD. Most likely, before the end of the presidential elections in the USA, the trend in the pair will be directed upwards. Now all factors contribute to the decline of the American currency.
Very interesting events on Thursday took place in the oil market. Black gold quotes collapsed by 6% on the news of a record drop in the US GDP. However, a strong directed day did not work out. Someone started to buy back the oil on the fall. And by the close of trading the total daily minus was only about 2%.
What does it mean? Does anyone really think that the situation with the coronavirus is about to go down? There are no prerequisites for an increase in oil demand in the near future. We assume that maybe somebody knows something. For example, we are talking about changes in the OPEC + agreement.
What’s waiting for us today?
03:00 Level of business activity in the service sector in China for July
08:00 Retail sales in Germany for June
11:00 EU GDP for 2nd quarter
11:00 EU Consumer Price Index June
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.