The coronavirus epidemic is not able to stop the positive sentiment in the financial markets, including stocks, after yesterday's strong data from the American manufacturing sector. Investors seem to be abandoning safe assets such as gold, and the appetite for risk seems to be growing. The Nasdaq 100 index has thus established a new historical record.
Worldwide, the number of confirmed COVID-19 cases has increased to 10.7 million, of which over half a million people have died. The United States appears to be the new epicenter of the pandemic, with over 50,000 cases per day. This is the biggest increase since the outbreak. Meanwhile, in Brazil, the increase in new cases was over 46 thousand, and in India almost 20 thousand.
However, investors do not give up their shares, as it was in March, hoping for a new vaccine. Stock market indices in Europe are rising on the one hand because of hopes for a V-shaped recovery of the economy, as well as information about the COVID-19 vaccine from Pfizer and BioNTech. These vaccines have been positively evaluated in early human studies. The sentiment is also supported by optimistic PMI data from China, Europe, and the USA, which was published on Wednesday, while investors are waiting for the report on employment in the USA today.
Exceptionally, data from the U.S. labor market, including non-farm payrolls, will be published today rather than Friday at 2:30 pm. Friday in the United States is a day off before Independence Day, which will take place on July 4. Today's data can be a factor in the response of the U.S. Federal Reserve to further monetary policy and government action to support employment.
In the foreign exchange market, the abandonment of safe havens assets also seems to be the case with the sale of the US dollar, which may help defend the key support of the EUR/USD pair at 1.1200. Currently, the exchange rate of the main currency pair is already approaching 1.1300. It is also worth noting the recent rally of the GBP/USD exchange rate with breaking the upper limit in the downward channel. Technically, the situation may be favourable for the British 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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