EUROPEAN SHARES-Stocks rose in Europe

Stocks rose in Europe on Tuesday, following a mixed trading session in Asia despite reassuring data from China overnight. Stock markets around the world have extended their very-short-term rally with investors’ appetite towards risky assets revived amid signs of stabilization in the number of coronavirus cases in some of the worst affected countries in Europe. Italy reported its lowest number of daily new cases in weeks while the data also seems to be trending lower in Germany as well as in Spain. However, even if the current rally limits losses as we head into Q2, the outlook remains bearish for Europe. First, it is far from certain that the bottom of the market is definitely behind us. Secondly, even if it is, investors around the world are highly likely to soon start pricing in the negative impacts of such massive monetary adjustments from central banks. This situation is especially true in Europe where the ECB is likely to get out of the crisis with record levels of debt, which will certainly impact on the robustness of the EU bloc. 

The Stoxx-50 Index is trading higher today, above 2800pts, led by travel and leisure shares. The German DAX-30 Index is today’s best performer with the market challenging the upper band of its consolidation zone, a clearing of which could drive prices higher still towards 10,200pts and 10,435pts by extension. Both the MACD indicator and the 55-day moving average are giving bullish signals, however, another failure to break through the ceiling at 10,065pts could lead prices down to support levels at first 9,970pts and then 9,815pts.

OIL-WTI climbing back above $21

Oil price is attempting a difficult rebound with WTI climbing back above $21 after sinking to a 17-year-low of $19.40 yesterday evening. Rumours about talks between Putin and Trump, will include discussions on the oil price, are giving some hope to the barrel amid a backdrop of its dramatic performance YTD that shows a loss of 60% while a huge oversupply risk continues to dominate sentiment.

GOLD-volatility has slowed down

In the last few trading sessions volatility has slowed down on gold with the price consolidating just above $1,600 with stock markets also seemingly found more stability after their recent plunges. Despite this, uncertainty remains just around the corner as the impact of coronavirus on the global economy will be significant. 

The technical scenario remains unchanged as a fall below $1,590 would denote some weakness, while a clear surpass of $1,640 could open the doors for further recoveries. It will be interesting to see the reaction of gold once the risk off scenario returns to the markets, with potential space for more gains for bullion.

FOREX-Higher demand for dollars from global businesses

The dollar is recording gains against the two global safe havens of the Japanese yen and Swiss franc. One explanation offered by some is a higher demand for dollars from global businesses as the fiscal year comes to an end. However, the main reason for the greenback’s strength versus the haven currencies is the better-than-expected Chinese PMI data for March, which could indicate the return of some form of normality, just enough to lift the spirits of some investors.

EUROPEAN SHARES-World consolidating towards the tops

European shares drifted lower on Monday, despite bullish moves in before the market opened on the back of another set of stimulus moves from Asia. Market volatility isn’t as extreme as what the levels it has reached over the past few weeks but still remains unusually high. That said most indices are now getting starting to stabilize with markets around the world consolidating towards the tops of their bullish retracement reached last week amid a belief that the bottom may be behind us now. On the other hand, the deteriorating health situation continues to have a serious impact on investors’ exposure to risk assets.  Some portfolio managers think it will take a long time for the situation to get back to normal with reversal in the trend reversal expected until a vaccine is successfully created. 

The IBEX-35 from Madrid is the worst performer so far with the price trading below 6,600pts. The 34-day moving average has reversed and now plays a resistance role in a market already heading for the lower band of its short-term bullish channel. A break-out below 6,345pts could extend the current slump to 5,875pts with 5,500pts and then 5,120pts the key levels afterwards.

OIL-Markets are now betting that the crisis could be relatively long

The weakness of stock markets is adding further bearish pressure on the oil price, with the WTI benchmark again approaching the psychological threshold of $20. Markets are now betting that the crisis could be relatively long, and the barrel is the perfect asset to be shorted by traders. From a technical point of view, the price is now dancing between the significant figure of $20 and the support at $20.50, which is the bottom reached in the last few weeks. A clear fall below $20 would open space for further declines amid this massively bearish trend.