Global equities began tumbling as earnings season and retail sales make debut bringing forth the reality of COVID-19 pandemic’s impact in figures of numbers aside from victim and death toll counts.
Summary: Global equities have finally given up on relief rally led by easing COVID-19 cues and support measures from major central banks as earnings season makes debut. European market saw major shares and indices build a dovish rally as the first batch of earnings reports made clear the impact of the COVID-19 pandemic on industrial and economic activity.
Energy sector stocks which made earnings report public today such as Total SA, Royal Dutch Shell, and BP plc saw earnings nose dive given the impact of COVID-19 on global supply-demand ratio. Earnings reports from across the globe set to make debut as the month moves forward are likely to paint a picture, which will make it evident that ongoing economic decline is worst since the Great Depression in the 20th Century.
Gold: Gold price saw a slight decline in the international market today owing to profit booking activity post previous session multi-year high price levels. However, the decline is negligible as the price of yellow metal still holds steady above $1700 handle supported by the prevalent cautious tone in the global market.
Crude Oil: Price of crude oil futures on both major international benchmarks across the globe on IMF Warnings. IMF report stated that OPEC+ supply cut measures would not affect the possibility of storage space running out from production levels set to occur within a matter of weeks. This caused Brent futures to declined by 7% while WTI futures declined by 5.5% in the intra-day activity.
DXY: US Dollar index, which measures the strength of US Greenback against six major currencies, managed to recover the previous session’s decline and is back above the 99 handle. This move was driven by a broad-based increase in caution influenced by dovish projections for earnings reports. But USD is unlikely to see sharp gains similar to its experience in the recent past given the impact of Fed’s measures.
On The Lookout: Earnings season has kicked in, and quarterly financial reports from major corporates are the main focus of market participants. Fed Daly’s comments to Wall Street Journal stating that she believes recovery is likely to be uneven and slow in US economy came as a major blow in addition to IMF’s forecast of a 3% drop in world GDP and failure of OPEC+’s production cut agreement in improving global oil glut scenario.
A refreshing update among all this is that US Government has agreed to provide the airline market with a bailout option by providing US$ 25 billion as a support package to the industry in order to help cover payroll costs, which have taken a huge blow owing to ongoing COVID-19 crisis.
On the economic calendar front, the US calendar is set to see the release of Retail Sales data, industrial production and manufacturing production data, and EIA crude oil inventory. In contrast, the Canadian calendar sees the release of the Bank of Canada’s interest rate statement and monetary policy report.
Trading Perspective: Wall Street is set to see clear dovish activity in North American market hours today, as evident from the activity of US futures, which traded in the international market. Fed Daly’s comment and IMF’s warnings are major blows. On earnings calendar front, Wall Street sees quarterly data from Charles Schwab, Bank of America, Citigroup, Goldman Sachs, L3Harris Technologies, PNC Financial, and US Bancorp.
EUR/USD: The pair continues to hold its fort above 1.09, and this can be said as an achievement for EURO bulls given the fact that recent gains were made by building up on broad-based USD’s weakness. While the pair did test mid-1.08 handle, it has since recovered and holds steady above 1.09 handle, albeit failing to recover above mid-1.09. Traders now await US data for short term profit opportunities, but given the dovish forecast, EURO is unlikely to see a major change in directional bias.
GBP/USD: The British Pound continues to hold its exchange rate against US Dollar steady above 1.25 mark as both sides continue to haggle for control over price momentum. GBP remains weighed down by UK’s COVID-19 scenario woes while USD remains weak due to dovish retail sales projections. Traders now await US data for short term profit opportunities, but the price is unlikely to move above 1.26 handle in the immediate future.
USD/CAD: The pair finally managed to see price recover above 1.41 handle on crude oil price weakness driven by IMF warnings. Further, USD’s recovery from the previous session’s losses also helped it move back above 1.41 handle. Traders now await US data, EIA stockpile info, and BOC interest rate decision for short term profit opportunities and directional cues.
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