EUROPEAN SHARES-Following Asian markets and US futures amid global risk

European shares drifted lower on Thursday, following Asian markets and US futures amid global risk aversion sentiment boosted by mounting virus concerns. Stock investors remain stuck in uncertain times, with various market drivers to be considered before making their investment decisions, leading to the current lack of directionality. Whilst the next US stimulus move is already highly anticipated by most traders, most are keeping a cautious eye towards macro data as well as corporate news in order to get more clues on the impact of the pandemic. Today’s trading sessions will be marked by major US data, with initial jobless claims and existing home sales data for September due later today, as well as earning reports from large US groups like Coca Cola, AT&T and Intel. In Europe, stock investors expect more volatility on the CAC-40 index as a batch of results from French-listed companies like Dassault Systemes, Hermes, L’Oreal, Kering, Thales and Michelin are awaited during and after the trading session.

The market went to test its major support zone around 4793 pts shortly after the opening bell, and has successfully rebounded since then. Prices will have to clear the 4,800 pts level in order to unlock the bullish potential towards 4,830 pts on the very short-term. A break out of the 4,772 pts/4,804 pts zone could quickly drive prices deeper towards 4,745 pts and 4,665 pts by extension.

GOLD-Interesting assault to the resistance level at $1,930/1,932

Gold spot price rallied to $1,932 as expectations of further monetary stimulus initially grew in the US, before easing down back to $1,915 after doubts over an imminent deal emerged.

From a technical point of view, there has been an interesting assault to the resistance level at $1,930/1,932, but that level remains firm so far. Investor interest remains huge and every time politicians speak of the possibility of new economic stimulus (maybe even before the US election, so potentially in just a few days) bullion rallies. It is clear the yellow metal is seen in this phase as a rescue anchor in a different scenario. Gold could mitigate portfolio impact in case of a new stock collapse – and this is not a big news – but investors are also seeing bullion as an inflation hedge, in a scenario where central banks are pumping huge amounts of liquidity as they attempt to recover economies.

FOREX-Risk appetite rose

The dollar index, which measures the performance of the greenback versus a basket of other major currencies, has lost more than 1% since the beginning of the week as risk appetite rose and the appeal of the safe havens diminished. Hopes that Republican and Democrat law makers in Washington would reach an agreement for the release of an economic stimulus package led to an increase in optimism. However, a deal between the two parties, allowing the release of economic aid before the November 3 elections, is starting to look unlikely and as a result the greenback’s losing streak appears to have come to an end as the dollar index remains flat during early Thursday trading.

EUROPEAN SHARES-European benchmarks are being weighed down

Stocks drifted lower on Wednesday, despite bets on further US stimulus driving most Asian stocks and US Future contracts higher overnight. Investors were pleased to see the US House of Representative speaker Nancy Pelosi maintaining her “hopes” of a compromise on the next stimulus plan before the end of the week. However, while this has helped to sustain market sentiment on a very short-term basis, most investors have already priced this into their trading with any failure to deliver the plan by the end of the week likely to trigger sharp moves down on riskier assets. European benchmarks are being weighed down by both the healthcare and energy sectors this morning with traders cautiously waiting for corporate news as well as the US Crude Oil Inventories data later in the afternoon. Today’s brings earning reports from TechnipFMC and Worldline as well as results from Verizon and Tesla in the US.

The FTSE-100 index is one of today’s worst performers so far after investors’ appetite decreased amid difficult Brexit talks with the EU that are now set to continue into next week at least, if no agreement is reached between the two blocs before Friday.

FOREX- clear indication that investors are for now dismissing a no-deal scenario

The pound gained more than 0.5% versus both the dollar and the euro during early Wednesday trading, a clear indication that investors are for now dismissing a no-deal scenario. As reports emerge that UK and European officials will reignite talks, the markets have strengthened their belief that the British government’s stance of preparing for no-deal was nothing more than strategic positioning with an eye on continuing negotiations.

EUROPEAN SHARES -Covid-19 infections has made investors expect further government support

European stocks edged higher on Monday, alongside Asian shares and US Futures, despite mixed macro data from China. Positive talks between US officials about a “possible” stimulus deal prior to the elections has been sustaining market sentiment this morning but it wasn’t just that. Acceleration in the number of Covid-19 infections has made investors expect further government support on a short-term basis and it seems they are already pricing that in, with the nature of the support depending on who wins the upcoming presidential election. European investors remain focused on Brexit with surprisingly positive developments to start the week with the UK Parliament potentially forcing Prime Minister Boris Johnson to rewrite or reconsider its Internal Market Bill. This may revive stalling talks with the EU bloc after investors were disappointed to see Boris Johnson ready to walk away from the table without any deal. However, despite this early positive trading mood, investors will remain cautious and monitor corporate news as the earning season continues. All European benchmarks are trading higher, led by insurers and the banking sector, with the French CAC-40 the best performer as the market now heads up towards 5,000pts.