Market Analysis

The pound is on the front foot

FOREX

The pound is on the front foot against both the dollar and the euro. Sterling is benefiting from the improvement in market sentiment following several announcements of government-led rescue packages and intervention from central banks on an unprecedented scale across the globe. Markets reacted positively to the latest news of a deal being struck between the White House and Congress for an economic aid package of $2 trillion aimed at mitigating the fallout from the coronavirus crisis on the economy of the United States. Risk related assets recorded gains and the pound joined the bandwagon. The question now is, will this risk rally be sustainable or will it be diluted amidst the expected torrent of negative economic performance indicators investors will soon be presented with? Economies across the globe are showing signs of shrinking at unprecedented speeds and that realisation is likely to overshadow any positive sentiment generated by financial rescue packages and intervention.

Ricardo Evangelista – Senior Analyst, ActivTrades


GOLD

The gold price is slowing down after two impressive sessions of gains. The risk-on dynamic, which in the last 48 hours largely dominated the markets, is not supporting bullion price, while investors are probably switching some liquidity back to stocks. Technically we have a first support at $1,595, which is today’s low, while a clear break out above $1,630 would open space for further rallies.

Carlo Alberto De Casa – Chief analyst, ActivTrades


OIL 

Risk-on remains predominant on markets. This is moderately helping the oil price in its attempt at a difficult recovery, as investors are still worried about the huge oversupply that is likely to remain the main topic for the next few months.  The WTI price jumped up to $25 in the first part of the week, but for the time being has been unable to continue this recovery. Despite the huge measures agreed by the US Government and the Fed, investors are waiting to see a clearer picture about coronavirus and a possible path to the end of this global problem.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 

The bullish mood continues in Europe on Wednesday with shares extending this week’s advance following gains registered overnight by Asian shares. Today’s boosted market sentiment comes from Washington as investors were happy to see the White House finally confirming an agreement on the Covid-19 response bill with the Senate and pushed prices higher. Even if we are seeing much less volatility on share markets than the weeks before, the trading environment remains blurry and it’s still hard to know if the current rally will turn into a proper recovery or a simple bearish market correction. Most European benchmarks are now getting closer and closer to major resistance levels and, with no significant progress on the fight against the deadly virus, we can expect a sharp reaction when the prices challenge these zones.

All of the European indices are in green territory today with notable gains coming from London to Madrid, which are being driven higher by the financial, industrial and basic material sectors. The Stoxx-50 Index is trading above 2,800pts as well as reversing the trend of its 55-day moving average. However, the market will still have to breach strong resistance at 2,855pts to close the bearish gap opened at the beginning of March.

Pierre Veyret– Technical analyst, ActivTrades

 

*The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication. All information has been prepared by ActivTrades PLC (“AT”). The information does not contain a record of AT’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.