COVID-19 medicine cues, positive crude oil prices, and earnings reports underpin broad-based risk sentiment.
Summary: Major global indices and equities are trading positive for the third consecutive session today on positive cues from earnings reports. Reports from US Gilead Sciences, stating that its experimental drug met its main goal for trial testing on early-stage COVID-19 patients, greatly improved risk sentiment.
Cues from Gilead’s announcement, along with a decline in the pace of the US weekly API of crude oil stockpile increase, helped improve crude oil price action and, in turn, boosted shares of major multinational energy firms. These factors helped maintain risk sentiment in the market, but the European market saw gains capped as the healthcare sector shares slumped.
At the same time, the Reuters report cited Refinitv data and predicted a sharp slump in Q2 earnings with a possible 40% decline in profit for companies that are part of the STOXX600 index. Spike in defensive sentiment amid ongoing economic crisis and global COVID-19 pandemic continues to underpin cautious tone in the market affecting long term fundamentals. In the Forex market, major global currencies continued to retain positive price action against US Greenback on prevalent risk sentiment.
Gold: Gold is seeing the price of both its futures contracts and spot price continue to decline steadily as safe-haven demand dwindles amid positive earnings reports and prevalent risk sentiment. Today’s report from Gilead Sciences stating that its experimental drug trial met its main goal for early phase for COVID-19 patients came as a major blow causing the price to fall below $1700 handle temporarily.
Crude Oil: Crude Oil price is trading on a positive note today, albeit remaining trapped near a familiar price range. Reports of a slower pace in weekly crude oil stockpile spike and cues from positive developments surrounding COVID-19 drug testing greatly improved crude oil demand outlook helping oil bulls gain fundamental support for a positive price rally.
DXY: The US Dollar index, which measures the strength of US Greenback against six major rival currencies, was mostly flat today, albeit displaying a clear dovish bias. The index remains steady above mid-99 handle for now, but positive risk sentiment continues to hinder USD bulls while traders focus on Fed monthly meeting update for directional cues.
On The Lookout: Today’s main focus is on FOMC monthly policy decision and interest rate meeting update and press conference from Fed Chair Powell. Cues from the Gilead Sciences report also helped improve mood. EIA weekly oil stockpile report will help solidify crude oil price direction and energy sector rally in case the build rate has declined compared to previous readings.
On the earnings calendar, Wall Street sees a busy schedule as the quarterly reports from ADP, Boeing, Dish Network, Facebook, Garmin, General Electric, Hasbro, Hilton Worldwide, Mastercard, Microsoft, Northrop Grumman, Qualcomm, T-Mobile US, Tesla, and eBay makes headlines today.
On the release front aside from EIA weekly crude oil stockpile report and Fed update, North American market hours sees the release of US GDP, Canadian Foreign Securities Purchase report, and US Pending Home Sales report while Pacific-Asian hours sees the release of Chinese PMI’s and Japanese Retail Sales data.
Trading Perspective: Wall Street is set to open positive today as cues from Gilead Science report and cues from yesterday’s positive Alphabet Inc earnings report underpins positive risk sentiment in the US market today. US futures trading in the international market also saw positive activity suggesting upbeat risk assets activity in Wall Street today.
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