EUROPEAN SHARES-uncertainty remains the overriding sentiment

Share markets opened lower everywhere in Europe on Thursday as uncertainty remains the overriding sentiment and has pushed investors into taking any profits generated by this week’s recovery attempt. The fact remains that investors from around the world have welcomed the recent historical batch of monetary and fiscal responses to coronavirus and these measures have helped traders gain a clearer view and more certainty about the future of the global economy. However, most investors now fear the human and economic struggle against the deadly virus will continue further into Q2, Q3 and even possibly Q4, which would deepen the impact across all economies and drive some regions into a profound recession cycle. So far, markets in Europe are being driven lower by the mining, energy and the discretionary consumer sectors with companies like Linde and LVMH among the eurozone’s worst performers. Surprisingly, the FTSE-MIB is one of the most resilient indices so far in Europe with the market still trading above 16,560pts following a clearing of its bearish trendline yesterday while the RSI indicator, which is above its 50% zone, is showing a very short-term bullish pressure. 18,260pts remains the first target for the market while a fall below 16,560pts would open the way to new lows around 15,800pts and then 13,780pts.

OIL-The combination of coronavirus and the failed OPEC

Oil attempted to rebound earlier this morning but despite these dramatically volatile times, the price remains drowned by growing expectation of a huge oversupply. The combination of coronavirus and the failed OPEC+ deal is putting the barrel in an extremely dangerous situation. Technically, the first key resistance area has now been moved to $25, on the peak reached yesterday, while $23-$23.20 is an interesting area of support which is stopping further declines. However, any fall below this zone could generate renewed selling momentum. Many automatic stop losses are now placed below this level as investors are still expecting another return to $20-$21 amid the coronavirus crisis further degenerating and with it an even more severe hit to the long term demand for oil.

FOREX- new Covid-19 cases in the US is spiking

The dollar is down against the euro, the yen and the pound during early Thursday trading, as investors await the publication of the initial jobless claim numbers in the United States with some anxiety. It is widely expected that these numbers will be extremely high, potentially the worst in many decades due to the abrupt economic slowdown caused by the measures to contain the spread of the coronavirus. At the same time the number of new Covid-19 cases in the US is spiking, further weighing the greenback down. It is interesting to note that the dollar’s weakness is occurring despite the White House and Congress having reached an agreement on an economic aid package worth $2 trillion, reinforcing the idea that during these interesting times the virus is setting the agenda, not policy makers.

EUROPEAN SHARES-The bullish mood continues in Europe

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.

OIL-Risk on remains predominant on markets

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.

GOLD-The risk-on dynamic

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.