EUROPEAN SHARES-The worsening virus situation in many hotspots is weighing on market sentiment

The stock market showed signs of slowing down in Europe on Thursday, despite a bullish correction in Chinese tech shares overnight, as the initial enthusiasm over a vaccine starts to wane. The worsening virus situation in many hotspots is weighing on market sentiment as it sparks fears of tougher containment measures that could bring further economic damage. While a bearish correction after the rally over the past few days would be logical and even healthy, fears of a W-shaped recovery are occupying more and more space in investors‘ minds. Today’s session is likely to remain volatile as investors will have to cautiously monitor speeches from top central bankers at the ECB forum as well as major macro data from the US (CPI and jobless claims). Technically, European benchmarks remain capped by major resistance, with buyers not strong enough to push the market higher. The DAX-30 Index has significant short-term resistance as 13,245pts and then 13,450pts. The first supports can be found just above 13,100pts and 12,900pts before the 23.6% retracement ratio at 12,825pts.

GOLD-The greenback inversely correlated with bullion and commodities.

Despite “risk off” dominating the last few days on stock markets, gold has been weak and we have seen the dollar recover, with the greenback inversely correlated with bullion and commodities. A major reason for gold’s weakness has been the sharp decline on stocks forcing some traders to close positions on gold to avoid margin calls on other losing trades. From a technical point of view, the scenario is weakening for gold, but the price – so far – has managed to remain above the key support level of $1,850. In other words, we are still inside the huge lateral trading range of the last few months between $1,850 and $2,070. A clear fall below this level could generate quick declines with stop losses likely to be placed below this threshold. For the time being investors seem to be waiting for the outcome of the US presidential election next week and its consequences for financial markets before taking up strong positions.

FOREX-Investors are concerned about the impact the second wave of the pandemic

Euro trading has been subdued so far on Friday, with the single currency almost flat to the dollar, as investors await the publication of Eurozone GDP data later today. Just like in previous sessions, risk aversion is dominating market sentiment. Investors are concerned about the impact the second wave of the pandemic and the winter lockdowns will have on economies already battered by the first wave. Even US GDP numbers published yesterday, showing economic activity had rebounded by 33.1% during Q3 failed to generate enthusiasm in the markets. Demand remained high for safe haven assets like the dollar, as the jump in last quarter’s GDP didn’t mask the fact that compared with the same period in 2019 the American economy actually shrunk by almost 3%.

FOREX-Second wave of the pandemic dominates

The euro is on the backfoot during early Wednesday trading, losing ground versus other major currencies, especially against the safe havens of the US dollar and Japanese yen. Risk aversion is the prevailing mood on the markets, as the second wave of the pandemic dominates headlines and reports point to the possibility of new national lockdowns in Germany and France, while on the other side of the Atlantic uncertainty over the outcome of next week’s presidential election is also feeding into the risk-off sentiment.  

EUROPEAN SHARES- French President Macron is now expected to announce

European shares continued their slide on Tuesday, following drops on US futures overnight. Investors continue to assess the possible impact of more and more restrictions on economies and prefer to limit their exposure to riskier assets due to rising uncertainty. This is especially true in Europe where French President Macron is now expected to announce an extended curfew as well as new social interaction limitations, following recent measures from both Italy and Spain. Furthermore, the uncertainty brought by the upcoming US Presidential election combined with disappointment over the lack of a new fiscal aid package keeps on denting investors’ risk appetite in the short-term. If this situation remains, investors are likely to increase their trading exposure towards safe havens like JPY, USD or even treasuries while equities will continue their bearish correction. Today’s session will be marked by US data with both Durable Goods Orders as well as the anticipated CB Consumer Confidence. On the corporate front, traders will be awaiting results from HSBC, Merck & Co., Microsoft, Pfizer and 3M due later today.

FOREX-Who gets to be the next US president

With one week to go until the US Presidential election, there is a sense of calm in the markets. All major currencies are almost flat as the bulk of investors now await the closing of the polling stations late on November 3. This election carries perhaps more weight than previous ones; facing a global pandemic, growing friction with China and increasing social polarisation, the choice of who gets to be the next US president could be a crucial moment in history whose impact will be felt across several market-sensitive areas, such as the stimulus package, trade wars and even Brexit on the other side of the Atlantic. So, unless something very substantial occurs between now and November 3, we should expect lower than usual volatility until the polling stations close.