On Tuesday, indices on Wall Street rose again, and closed above the opening prices. The technology companies Nasdaq index recorded a new all time high, and sentiment improved in this sector mainly due to new announcements and the solution of technology giant from Cupertino, Apple.
This information took precedence over fears of growing COVID-19 cases and increased hospitalisation of infected people in many US states. The 7-day moving average of COVID-19 cases is at its 50-day peak, and several governors have warned against unacceptable rates of epidemic growth. Dow Jones Industrial Average yesterday rose by 0.5 percent, S&P 500 climbed by 0.4 percent and Nasdaq jumped by 0.7 percent, achieving the longest series of increases since December 2019.
This morning the futures on these major American indices seem to be in the area of yesterday's closing. The DJIA contract does not indicate any changes, just like the S&P 500, while the Nasdaq 100 is rising by slightly more than 0.2 percent. In Europe, meanwhile, the futures on the Euro Stoxx 50 index are falling by more than 0.6 percent, just like the futures on the German Dax index.
USD 1770 per ounce of gold
On the commodity market, it is impossible not to notice the price of gold, which has risen to its highest level since 2012. For the first time since October 2012, gold has exceeded USD 1770 per ounce.
It seems that the rising of the prices in the commodity market are due to concerns about the second wave of coronavirus infections. More than 9 million people have been infected by the coronavirus worldwide, and more than 470 000 have died.
What will New Zealand do with a strong currency?
From the events in the currency market, it is worth noting the statement from the central bank of New Zealand. The Reserve Bank of New Zealand maintained the main interest rate at 0.25 percent, as expected by economists surveyed by Bloomberg.
The asset purchase programme remains at the level of 60 billion NZD, and the Monetary Policy Committee is prepared to provide additional stimulus if needed. The fiscal stimulus provided by the government, announced in the May budget, was also slightly larger than we had assumed. These results give grounds for some confidence, but there are still major economic challenges, as stated in the statement to the decision. More importantly, however, the RBNZ pointed out that the recent appreciation of the NZD is putting pressure on the performance of export companies. This seems a clear signal that the central bank does not want to tolerate such a strong strengthening of the New Zealand currency.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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