Virus woes continue to undermine risk sentiment as 4 states report more than half of the total US new COVID-19 victim count.
Summary: Global equities and indices hit of the new quarter with a softer start amid mixed investor sentiment as risk sentiment in key economies across the globe continue to remain divided. While the Asian market and European market regions are seeing positive market activity supported by hopes for economic recovery and low COVID-19 victim count despite the second surge in the outbreak, the US market is seeing a sharp decline in risk sentiment over record level victim count in key US states.
European market yesterday saw major indices and key stocks close with best quarterly performance since 2015 as hopes of economic recovery remains high supported by comments from ECB Lagarde stating that worst in over and support from news of COVID-19 vaccine development trials. While the European market saw positive opening today, the gains of key risk assets remain limited while some indices even saw a slight decline led by profit booking activity in associated assets.
Precious metals: Rare metals are trading range-bound with slight dovish bias albeit staying above key psychological levels. Escalating victim count in the US, led cautious tone allowed the gold price to breach $1800 handle yesterday while other rare metals also enjoyed considerable demand. The profit booking activity which followed the rally in early market hours today caused the price to decline from previous session highs but the loss remains minimal. Safe-haven assets continue to remain fundamentally supported over caution led by COVID-19 woes and Sino-U.S. tensions in the short term.
Crude Oil: The price of crude oil in the international market across both Brent and WTI are positive today. While the gains were muted and price action remains within the familiar price, the positive market tone remains firm as US API weekly stockpile data saw worse than expected decline. Traders now await the US EIA stockpile data set to release data for further cues to demand/supply outlook.
DXY: There isn’t much change in the scenario surrounding the Dollar index’s outlook. The index still remains firmly rooted above 97 handle as there aren’t any major market shifting dynamics in play. With Covid-19 woes balancing out any news of economic recovery measures the USD index is likely to remain at current levels for the foreseeable future.
On The Lookout: The oil market is finally showing signs of rebalancing with US API data released yesterday showing worse than expected decline. A similar outcome in EIA reading set to release today will greatly help improve short term demand-supply dynamics in the oil market allowing energy sector companies to see positive price momentum in the stock market. The COVID-19 scenario in the US continues to worsen with the four states – Texas, Florida, California, and Arizona continuing to remain the worst affected. With the 4th of July weekend coming ahead, the current conditions point to a muted holiday celebrations. California and Texas reported new victim count at 8441 & 6900 respectively. On release front today, the US calendar sees the release of Manufacturing PMI, ISM Manufacturing PMI, and ISM Manufacturing prices, EIA weekly crude oil inventory data.
Trading Perspective: Wall Street is set to see muted opening followed by dovish activity in North American market hours as COVID-19 woes continue to affect risk sentiment. US futures trading in the international market were also lower as COVID 19 woes and concerns of US retaliation over China’s move to make arrests in Hong Kong under new national security law affected investor sentiment. North American market hours are likely to see relatively lower trading volumes today over the holiday in the Canadian market.
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