Equities Recover on Chinese Cues, Earnings in Focus

Chinese efforts to boost economic activity and growth provides fresh wave of risk sentiment. Wall Street to continue earnings driven price activity. 

Chinese CuesSummary: Global equities recover momentum on Chinese cues. Headlines from China saw PBOC announce plans for injecting further 500 Billion Yuan in 1-2 week repo to ensure adequate liquidity. There were also reports on talks for reducing growth target for the year ahead in China in-order to cope with loss from the coronavirus outbreak impact on Q1 revenues. These factors helped provide market bulls with fresh wave of positive fundamental support resulting in major indices and equities trading on positive note.

Following cues from Asian markets, European market also opened on positive note with major indices seeing rebound activity. Gains in mining sector shares also provided European indices with positive boost. Forex market saw major pairs remain range bound as USD remained firm following positive US PMI data released yesterday.

Precious Metals: Rare metals declined as fresh wave of risk sentiment fuelled by Chinese cues resulted in fund flow changing direction towards riskier assets. Further, spike in USD on US PMI data also made rare metals a costly investment for international investors resulting in profit booking activity and sharp price slide. 

Crude Oil: Crude oil price is trading positive today as headlines and cues from China hinted at government’s efforts for reducing impact of the virus outbreak which was seen as means for possible increase in demand. Further, news of OPEC members meeting to work on resolving sharp slide in crude oil price also helped crude oil bulls gain fundamental support. 

AUD/USD: The pair is trading positive as AUD bulls gained support from broad based improvement in risk sentiment. Further, headlines of efforts to support Chinese economy and RBA inspired gains added support to AUD bulls resulting in pair seeing steady positive price action with price seeing stable hold above 0.6700 handle. 

On The Lookout: The market in North American session is relatively quiet today. There are no major geo-political event related updates scheduled to hit market anytime soon.

On economic calendar schedule, American session will see release of Factory orders and API weekly crude oil stockpile data while Pacific-Asian session will see release of New Zealand employment data, Japanese Services PMI and Chinese – Caixin Services PMI/Composite PMI data updates.

On Earnings calendar front, Wall Street will see quarterly financial data updates from Atmos Energy, Cadence Design, Emerson, Fiserve, Ford Motor, Jacob Engineering, Ralph Lauren A, Royal Caribbean Cruises, Seagate and Walt Disney. 

Trading Perspective: As risk sentiment improved in the global market, US index futures trading in international market saw positive price activity. Further, cues from Asian and European market suggest Wall Street is set to open on positive note today. However, lingering caution on rising death toll over corona virus outbreak will keep gains in check as traders wait for earnings reports from tier 1 brands to provide directional bias and intra-day profit opportunities. 

EUR/USD: The pair is trading flat albeit with clearly visible bearish undertones. Firm USD keeps upside in check resulting in price mostly oscillating around 1.1060 handle. Dovish EU PPI data came as a blow to EU bulls while traders await US factory orders data for short term profit opportunities. 

GBP/USD: The pair is trading on positive note riding on smooth exit momentum which is further boosted by better than expected UK construction PMI data. However, firm USD in global market continues to keep GBP’s gains in check. Traders now await US data for short term profit opportunities. 

USD/CAD: The pair is trading flat as neither side managed to gain a clear upper hand. While recovering US T. Yields and positive macro data underpins USD bulls, broad based risk on investor sentiment and rebound in crude oil price underpins CAD bulls keeping both currencies in balances state. Traders now await US data for short term profit opportunities.

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