European stocks lower

Global Stocks Rally; Safe Havens in Retreat

Equity Markets

Global stocks rallied as markets were focusing on the positives and the heightened expectations of a quicker recovery following the sooner-than-expected reopening of economies. European shares powered higher and finished the day with gains between 2.5% to 4%.

World Equity Indices

Source: Bloomberg

Despite the geopolitical tensions currently present in the financial markets, Wall Street remains focused on the positives. In the race to develop a vaccine as quickly as possible, the Trump Administration has extended more government funding to five top vaccine programs coming from Moderna, AstraZeneca, Pfizer, Merck, and Johnson & Johnson:

  • Dow Jones Average Industrial gained 527 points or 2.1% to 26,270.
  • S&P 500 added 42 points or 1.4% to 3,123
  • Nasdaq Composite rose by 75 points or 0.8% to 9,683.

Currency Markets

In the FX space, major currencies remained stronger against the US dollar amid the risk-on environment. Safe-haven currencies like the greenback and the Japanese Yen stayed on the backfoot.

Source: Bloomberg Terminal

Despite a series of upbeat PMI data and a better-than-expected ADP Employment Change, the US dollar struggled to find upside traction. Geopolitical tensions and the civil unrest in the US are weighing on the haven currency. The index tracking the performance of a basket of currencies against the greenback is trading on the downside around the 97.30 level.

The Antipodeans continued to rally on the back of the overall optimism in the markets and the broad US dollar weakness. Australia’s GDP figures were mostly in line with expectations. The March quarter showed that the economic output contracted by 0.3% which reflects the impact of the raging bushfires across the country and the early impact of COVID-19. A bigger fall is expected in the June quarter due to the coronavirus-related lockdown measures, paving the way for Australia to mark its first technical recession in decades.

Both the AUDUSD and NZDUSD climbed higher and are currently trading around the 0.69 and 0.63 levels, respectively.

AUDUSD and NZDUSD (Daily Chart)

Source: GO MT4

The EURUSD continues to edge higher, lifted by positive news around the EU recovery plan and Germany’s domestic stimulus package of EUR100 bn to fight the economic impact of the coronavirus.

EURUSD (Daily Chart)

Source: GO MT4


The overall risk-on sentiment, a weaker US dollar and improving demand and supply fundamentals continue to provide support to the oil market. Overnight, the EIA reported that the US crude oil stocks changed at -2.1 million barrels in the week ending May 29. All eyes are now on the next OPEC+ meeting as the recent production cuts have played a significant role in rebalancing the energy market. Unlike previous meetings, there seem to be more positive headlines regarding the discussions between Saudi Arabia and Russia.

As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) are trading firmer at $36.98 and $39.61, respectively.


Gold is struggling to find upside momentum amid the risk-on environment. Geopolitical tensions and an environment of caution are providing some support to the precious metal. As of writing, the XAUUSD pair fell and is currently trading around $1,700.

XAUUSD (Daily Chart)

Source: GO MT4

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