Equity Markets

Global stocks struggled to edge higher on Tuesday amid the ongoing uncertainties on the virus front, and mixed earnings reports. European stocks were underpinned by concerns of a resurgence in COVID-19 cases following a few clusters in certain European countries.

Major US equities ended in negative territory dragged also by the struggles to agree on the next round of stimulus package:

• Dow Jones Industrial Average lost 205 points or 0.8% to 26,379.
• S&P 500 fell by 21 points or 0.7% to 3,218.
• Nasdaq Composite dropped by 134 points or 1.3% to 10,402.

Currency Markets

In the FX space, major currencies were mixed against the US dollar. The greenback found some support on the proposed stimulus plan of $1 trillion unveiled by the Senate Republicans. The stimulus package is yet to be approved by the Democrats – the immediate disagreement will probably be the cut in enhanced unemployment benefits.

On the economic front, US confidence weakened in July and the reading came below expectations at 92.6. The level of confidence is low as the rising number of coronavirus cases are signaling a deeper economic crisis. The immediate attention will be on the FOMC meeting which will end today and the GDP figures to gauge the extent of economic damage.

Commodities

Crude oil prices remained trapped around familiar levels despite a more bullish API report – the weekly crude oil stock declined to -6.829M in July 24 from previous 7.544M. We expect traders to keep monitoring weekly COVID-19 infections. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading around $41.19 and $43.46, respectively.

Gold

Gold has been on an unstoppable rally recently. The XAUUSD pair broke the record high seen during September 2011 as risk sentiment is fragile and investors are concerned about the overwhelming rise in the number of coronavirus cases that is threatening to plunge the global economy into a deeper recession. Given the ongoing uncertainty and geopolitical tensions, investors are hedging with safe-haven assets fearing a reversal in the sharemarket.

After reaching a high of $1,981 on Monday, the pair retreated from high levels dragged by a stronger US dollar ahead of the outcome of the FOMC meeting. As of writing, the XAUUSD pair is currently trading at $1,957.

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