Yesterday's session could have been quite nervous for many investors who are observing individual shares or entire stock indices. In Europe, indices have declined, and today the market is trying to calm down a bit.
The German DAX index fell yesterday to its lowest level for four weeks, and now the mood seems to be improving slightly. Sentiment also seems to be better after the excellent performance of US companies. Apple, Amazon, and Facebook published after the session better results than market expectations, which raised the Nasdaq 100 and S&P 500 indices. This tries to cover up the fatal macroeconomic data in the form of a meltdown in the US, German, French or Spanish GDP.
On top of that, there is another wave of COVID-19 infections, including in Poland with a record number of new cases. The northern part of Great Britain, together with millions of citizens, has been closed and a lockdown has been reintroduced. Restrictions have also returned in Belgium. Uncertainty is growing before the next outbreak already at the end of the holiday. Tokyo may report a record number of COVID-19 cases today, with Texas, Florida, and Arizona reporting the highest number of deaths.
The uncertainty for the markets may also be added by Donald Trump's statement about a possible postponement of the presidential election in the United States, which was originally scheduled to take place in November. According to Trump, who is losing in the polls, the conduct of the elections this autumn could be dangerous for health, and in turn, correspondence elections could lead to forgery and irregularities.
Therefore, it seems that the near future may bring increased variability, because the loosening of restrictions, holiday season, travel, lack of hygiene rules, all this may take us back to the starting point of fighting the virus, which could last until an effective vaccine was invented. In turn, we could wait another six months for it.
On the currency market, it is difficult to pass the wave of sales of the American dollar indifferently. The EUR/USD exchange rate has already approached 1.1900, after one of the biggest rallies in three years, i.e. since the French presidential election. It is possible that this may be just one of the waves of weakening of the USD, and the next may be ahead of us.
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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