Improved risk sentiment on lockdown easing measures provides bulls with temporary support.
Summary: The global equity market on Monday saw both Asian and European markets open on a positive note over optimistic developments in economic and COVID-19 fronts. Many countries are ramping up measures to create vaccines and medications for COVID-19, while governments are also showing signs hinting at easing lockdown measures in the near future.
In the European market, better than expected results from Deutsche bank’s quarterly financial report and government announcement to support the airline industry helped boost airline and travel sector shares, significantly improving risk sentiment in the market. Euro Stoxx50, CAC 50, and DAX indices have maintained a 2% spike across the intra-day session, which is a clear sign of improving market mood in the European market region. Forex market is also seeing major risk pairs and global currencies trade positive against USD and other safe-haven currencies on prevalent risk-on investor sentiment.
Precious Metals: Precious Metals are trading rangebound above key support levels in the global market today. While silver has maintained a clear dovish tone, Gold traded positive in the Asian market but declined in European market hours over profit booking activity amid improved risk appetite. While the price of spot gold has declined below $1720 handle it still holds steady above $1700 handle as firmly rooted caution in long term trading activity still remains unchanged.
Crude Oil: Crude Oil benchmark and futures are continuing their dovish price activity from last week, given the fact that there is no change in demand to supply ratio anytime in the near future. Despite major measures taken by OPEC members, the impact from storage space running out in the near future amid lockdown durations little to no-demand scenario continues to weigh down price activity in the immediate and foreseeable future.
DXY: US Dollar index, which measures the strength of Greenback against six major rival global currencies, is steady above the 100 mark but has maintained clear dovish outlook across Asian and European market hours. Improved risk sentiment in the market and positive developments in the US market have led to decreasing is safe-haven demand, which has kept USD bulls supported in the recent past. But lingering caution continues to support USD helping the currency hold fort against its global rivals.
On The Lookout: As the trading session starts for the week, Wall Street is set to see a relatively calm day amid recent volatile market activity. Over the weekend, despite warnings and concerns raised by health care experts and US President Trump, many US states have shown readiness to relax lockdown measures, and this has improved broad-based risk sentiment in the immediate future.
The long term outlook still remains cautious as COVID-19 still lacks both vaccine and medications, which means that relaxing lockdown measures can still result in yet another spike in COVID-19 victims and impact the global economy. However, support measures from major central banks and governments keep risk sentiment underpinned in short term outlook.
The week ahead is set to see quarterly data from three of USA’s iconic tech brands, namely Apple, Microsoft, and Alphabet. While Microsoft is expected to see positive data given the spike in demand for its office and cloud product services during lockdown measures both Apple and Alphabet Inc are expected to see a decline in quarterly earnings as Apple’s sales go down while ad-revenue takes a hit for Google ad services given the reduction in marketing and advertisement spending expenditure from major firms during this pandemic hit economic downtime.
Trading Perspective: Given silent macro calendar activity, broad-based investor sentiment is set to drive price momentum and volatility in the market today. US futures trading in the international market was positive on expectations for easing lockdown measures from various US member states. Wall Street is set to open positive, but gains are likely to be limited as traders will look out for further updates to hint at concrete progress in lockdown easing developments.
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