Equity Markets
The US sharemarket resumed from a public holiday on Monday with a bang of optimism but pared some gains in the final hours of trading following reports that the Trump Administration is considering a range of sanctions on Chinese officials.
Novavax Inc, a clinical-stage biotechnology company, has injected the coronavirus vaccine into 130 healthy volunteers in Australia in the first phase of trials. Global stocks edged higher on Tuesday fuelled by hopes of a potential vaccine.
Major US equity indices closed in positive territory but fell through their session highs dragged by tensions between the US and China:
- Dow Jones Average Industrial gained 530 points or 2.2% to 24,995.
- S&P 500 added 36 points or 1.2% to 2,992.
- Nasdaq Composite rose by 16 points or 0.2% to 9,340.
Currency Markets
In the FX space, major currencies were stronger against the US dollar as risk sentiment improved over the trials of a vaccine by another company. Commodity-linked currencies were among the best performers against the greenback compared to the safe-haven currencies.
The Antipodeans surged on the back of the overall optimism in the markets, the vaccine news and a weaker US dollar. On the economic front, the kiwi gained upside momentum with a better-than-expected trade surplus of $1267 million in April. Both the AUDUSD and NZDUSD pairs rose to an 11-week high before consolidating around the 0.66 and 0.62 levels respectively.
The EURUSD moved higher, lifted by a series of positive developments despite the US-Sino tensions. However, the pair remained range bound just below the 1.10 level. Europe’s frugal four and the EU Recovery Plan are weighing on the shared currency. The immediate attention will be on the draft recovery plan by the European Commission which is scheduled to be unveiled on the 27th of May 2020.
Commodities
With demand and supply fundamentals improving, the vaccine news and Russia’s willingness to further support the rebalancing of the market helped oil prices to rise higher. It appears that Russia is almost complying with the OPEC deal with its share of cuts.
As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) are currently trading at $33.93 and $36.17 respectively. Weekly oil reports will be eyed for fresh training impetus.
Gold
The risk-on environment has tamed the momentum of the yellow metal. However, caution still prevails given that geopolitical tensions are escalating. As of writing, the XAUUSD pair fell and consolidated around $1,712.
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