Bank, healthcare, and media sector earnings to hit wall street today, virus woes continue to dominate overall market momentum.
Summary: European market today saw major indices and key equities post sharp losses on cues from mixed Chinese macro data and a slew of weak earnings reports. Chinese data saw better than expected and positive GDP results making it the first country to post positive economic progress since the debut of the global COVID-19 crisis.
However, its retail sales data was highly disappointing which along with reports from local newspapers accusing drinks company Kewichow Moutai for overpricing liquor and alleged links to corruption caused key indices and risk assets to plummet today. In the European market, dovish reports from Dutch Beer manufacturer Heineken NV and luxury goods maker Richemont resulted in a huge dovish blow to the market. Caution loomed high as traders awaited further updates on stimulus measures and its limits during ECB meet and speech from ECB head Lagarde during the press conference of monthly interest rate decision meeting today.
Rare Metals: Both Gold and Silver continued to trade range-bound slightly above key support levels as they lacked the strength to make a positive price rally. While caution remains high in the market on account of the China-U.S. tensions and Virus woes, investors’ reluctance to place bets ahead of today’s ECB meeting resulted in rare metals retaining consolidative price action from the previous session.
Crude Oil: Crude oil market is seeing flat price action as traders are still digesting mixed cues. OPEC meeting saw members agree to increase production activity from August and disappointing Chinese retail sales data came as a major blow. But declining US weekly stockpile on both EIA & API reports and better than expected Chinese GDP and industrial/manufacturing production is a clear sign of improved demand in the physical market from the world’s largest crude oil importer and consumer. Amid mixed cues that keep demand to supply ratio and outlook forecast balanced at the moment crude oil price in the international market remains range-bound within familiar levels.
DXY: US Dollar index continues to remain firmly rooted in the upper range of the 95 mark. USD remains well supported by lingering caution on account of U.S.-China tensions and COVID-19 woes. Increased demand for US treasuries also aided USD bulls to some extent. But the Greenback is yet to post solid recovery against major global currencies in the international market as the focus remains on ECB meeting for cues on stimulus measures efforts.
On The Lookout: Focus remains firmly locked on earnings reports as earnings season for this quarter is heating up. Wall Street will see the release of quarterly financial reports from the last couple of top tier US multinational banks today. There is also the release of quarterly data from the healthcare sector both of which will provide plenty of cues for intra-day market activity. Some of the most awaited earnings reports for the day include – Bank of America, Morgan Stanley, Charles Schwab, Trust Financial Corp, Johnson & Johnson, Abbott Labs, JB Hunt, PPG Industries, and Netflix.
The Twitter fiasco over the hack of celebrity account also remains in focus. On the release front, the US macro calendar sees initial and continuing jobless claims, retail sales data, Philadelphia Fed Manufacturing Index, Retail Inventories Ex Auto, Business inventories, and TIC Net Long Term Transactions while Canadian Calendar sees the release of ADP Non-Farm Employment Change and Foreign Securities Purchases data.
Trading Perspective: US futures trading in the international market saw the dovish activity as COVID-19 victim count continues to escalate with each passing day. Aside from virus woes, tensions surrounding China-U.S. relations, twitter celebrity account hack fiasco, and disappointing Bank of America quarterly reports in pre-market hours greatly affected investor sentiment in the international market. Wall Street is set to open lower today but earnings reports will continue to influence intra-day activity.
EUR/USD: The pair continues to trade with a clear positive bias and is slowly edging its way up to the mid-1.14 handle over positive Euro area macro data. While USD remains weak in the international market, slight recovery of its strength in late European hours prevented pair from posting further gains. Traders now await ECB update and US macro data for short term profit opportunities.
GBP/USD: The British Pound is seeing positive price action with the exchange rate moving up towards the 1.26 handle. Better than expected Euro area macro data allowed the price to edge above the 1.259 handle but a slight recovery of USD’s strength led by increased demand for US treasuries capped gains below 1.26 mark. Traders now await US retail sales and jobless claims data for short term profit opportunities.
USD/CAD: The pair is trading flat today but has managed to hold its intra-day decline at the 1.3500 mark. CAD lacked fundamental support owing to mixed cues surrounding the crude oil market, but USD lacked the strength to recovery recent loss despite today’s slight recovery resulting in range-bound price action in the lower half of the 1.35 mark. Traders now await US retail sales data and jobless claims data for short term profit opportunities.
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