Date: 24 Jun 2020
On a week that clearly began with a hungry appetite for risk, Wednesday is offering a more cautious note with the safe haven dollar regaining the role of protagonist. On Monday and Tuesday investors chose to look at the bright side of an unclear situation, focusing on the progressive easing of lockdowns across the globe. However, as the sun rose on Wednesday it is impossible to ignore the growing number of new virus cases across the globe. There is some anxiety that the ideal scenario of a quick economic recovery could come under threat from a virus resurgence and this is keeping a lid on investor optimism and offering support to the dollar.
Ricardo Evangelista – Senior Analyst, ActivTrades
The spot price of gold reached a new 7 ½ year high, jumping above $1,770. The recent rally on stocks was not enough to sate investors’ appetite for bullion. In fact, the rally prompted further investment demand for gold as an increasing number of traders are viewing the continued gains on stocks as fragile and unsustainable. That’s why irrespective of whether stocks are in green or in red on any given day, investors are buying bullion.
Carlo Alberto De Casa – Chief analyst, ActivTrades
Share markets opened slightly lower on Wednesday, following a mixed trading session in Asia where stocks drifted in Tokyo but rose in Seoul after Kim Jong Un suspended its military actions against the South. Investors are tempering the enthusiasm and risk appetite they’ve had so far this week amid fresh spikes in coronavirus cases in hotspots such as Germany as well as the south and southwest of the US. However, current reassuring macro data from both Europe and the US tell investors stimulus measures are working well and provide further protection against any renewed downside risk that a second wave of COVID-19 might spark. Having said that, there is still a possibility that investors will reduce their exposure to the most virus-impacted sectors, such as Travel & Leisure as well as Oil & Gas on a short to mid-term view if new cases continue to pile up.
The FTSE-MIB from Milan is the only European benchmark to trade higher so far with the market holding above 19,600pts. The price continues to track within its horizontal consolidation between 19,580pts and 19,800pts with no bearish alert in sight. A clearing of the zone at 19,800pts is required to open the door of an extended rally towards 20,000pts, which is an important psychological as well as technical level.
Pierre Veyret– Technical analyst, ActivTrades
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