Earnings updates to dictate Wall Street price momentum amid a tightly packed schedule.
Summary: Major indices and key equities in the global market are trading with a positive note for the second consecutive session this week. While the Asian market saw slightly mixed activity in Chinese, Japanese and Australian markets, European market hours saw major indices and key equities from all major European exchanges trade on a positive note.
Better than expected earnings reports from UBS, ABB, and Novartis helped provide a boost to risk sentiment, while the slump in Wirecard shares over results from KPMG probe capped gains.
Overall, investors more displayed relatively higher risk appetite despite lingering caution resulting in positive price action across key risk assets. Forex market saw major global currencies trade positive against USD, albeit limited gains and price being trapped inside familiar price levels.
Gold: The yellow metal saw the price in both futures contracts and spot forex pair decline sharply as risk sentiment continued to improve for the second consecutive session today. The sharp spike in risk sentiment has caused the price to plummet below $1720 handle, but strong support around $1700 prevents further loss.
Crude Oil: Crude oil price remains trapped slightly above monthly lows but traded on a mixed note. CME’s move to force ETF’s that concentrates highly on retail speculative interest in crude to adjust their positioning caused spreads to widen between June-July contracts by more than $7 per barrel resulting in a sharp decline in WTI. At the same time, Brent remains steady above $20, albeit briefly testing $19.77 per barrel.
DXY: The dollar index, which measures the strength of US Greenback against six major global currencies, fell below the 100 mark as risk sentiment continues to improve with each passing day. Various nations and more US states announcing intention and schedule for relaxing lockdown measures caused risk sentiment to rise, weakening USD’s strength as a safe haven asset.
On The Lookout: Earnings season this week seems to be a positive influence for European markets so far this week, providing enough impact to shield stress from declining crude oil price and the resultant loss in energy sector shares. US Federal Reserve will start its monthly two-day session of FOMC members to discuss interest rate and policy-related decisions. Risk sentiment spiked further as Texas and Ohio became the latest members to join the list of US states which have announced the date for gradually easing lockdown measures.
On earnings calendar front, the US calendar sees the release of Preliminary wholesale inventories data, Preliminary goods trade balance data, CB Consumer Confidence data, and API weekly crude oil stockpile data. The earnings calendar is also filled to the boot with high impact reports as famous brands such as Pepsi Co, 3M, AMD, Alphabet Inc A&C, Caterpillar, Corning, Ford Motors, Harley Davidson, MSCI, Maxim, Merck&Co, Pfizer, Rockwell Automation, S&P Global, Southwest Airlines, Starbucks and Xerox release their quarterly earnings today.
Trading Perspective: Wall Street is expected to see major indices and risk assets open on a positive note. US Futures trading in the international market was positive ahead of American market hours, and earnings from 3M & Pfizer, which made headlines ahead of Wall Street opening, were better than expected, adding strength to broad-based risk sentiment.
Please feel free to share your thoughts with us in the comments below.