Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Opening Bell: German Consumer Sentiment Buoys Futures, Stocks; Gold Rises

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewJul 23, 2020 12:22
uk.investing.com/analysis/opening-bell-german-consumer-sentiment-buoys-futures-stocks-gold-rises-200444317
Opening Bell: German Consumer Sentiment Buoys Futures, Stocks; Gold Rises
By Investing.com (Pinchas Cohen/Investing.com)   |  Jul 23, 2020 12:22
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
CL
+1.27%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
MIAP0...
-0.92%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
VIX
+6.76%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
STOXX
-0.87%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
SSEC
-0.76%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
KS11
-1.70%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • S&P 500 jumped Wed to 5-month high on potential unemployment extension
  • German optimism and vaccine hopes offsetting souring US-China relations

Key Events

US futures for the Dow Jones, S&P 500, NASDAQ and Russell 2000 climbed on Thursday, along with European shares, on better than expected German consumer confidence, offsetting simmering Sino-US tensions.

The dollar's slump continued, pushing gold higher. Oil held above $42.

Global Financial Affairs

Contracts on the major US indices jumped this morning as European trading opened, after having slipped earlier, during the Asian session. Contracts on the NASDAQ outperformed.

The themes that boosted US equities during Wednesday's New York session—a positive outlook over a new government spending bill and apparent progress on a coronavirus vaccine—seemed to have faded this morning, resulting in mixed Asia trade.

Depressed US futures jumped decisively only when the STOXX Europe 600 Index opened higher, cutting yesterday’s losses in half. The German Gfk Consumer Climate survey beat expectations, seemingly confirming the view that Europe’s economic engine is climbing out of the coronavirus pit. Of course, this was likely made easier after passage of the EU's recovery fund earlier this week.

Futher boosting market sentiment: after consumer giant Unilever (NYSE:UL) reported strong earnings in which its sales declined less than anticipated, the stock surged 8.6%. Daimler (OTC:DDAIF) shares advanced after the automaker said it saw the first signs of recovery from the pandemic's devastation, especially with regard to Mercedes-Benz passenger vehicles.

From a technical perspective, we consider the pan-European benchmark’s acceleration today as a retest of Tuesday’s Gravestone doji, the centerpiece of an Evening star.

South Korea’s KOSPI underperformed, (-0.6%), as the country fell into a recession in the second quarter. The gloom was exacerbated by escalating Sino-US tensions darkening the path to a recovery.

China’s Shanghai Composite, on the other hand, merely edged lower, (-0.2%), closing near the top of the session. Some profit-taking after a four-day rally demonstrates that, unlike regional peer's Chinese investors aren't especially worried by Washington's diplomatic spat with Beijing. Japanese markets were closed for the Marine Day holiday.

Yesterday, US equities advanced for the fourth day. Traders rode the optimistic themes higher, even while averting their eyes from the lingering diplomatic tiff with China, the US's biggest trading partner.

SPX Daily
SPX Daily

The S&P 500 Index jumped to a five-month high, yesterday after news broke that the White House was reportedly considering a short-term extension of the $600 unemployment benefit that's set to expire at the end of July. The benchmark stopped within 2% of pre-COVID-19 levels, where a falling gap looms with its expected resistance.

In contrast to today’s sentiment beat in Germany, with double digit unemployment in the United States, some are seeing a second Great Depression on the horizon, a view shared by noted economist Stephen Roach, who cautioned against the ongoing illusion of a V-shaped economic recovery.

The VIX edged lower, declining to its lowest level since Feb. 21, before its rising gap, formed by trade around the coronavirus panic, extending a penetration of the 200 DMA.

VIX Daily
VIX Daily

While bullish, it still retests the June 5 intraday low, before it can close the gap.

Yields including for the 10-year Treasury note, fell to their lowest point since Apr. 21.

UST 10Y Daily
UST 10Y Daily

Unprecedented stimulus is weighing on rates.

Falling yields pressured the dollar for the fourth consecutive day.

DXY Daily
DXY Daily

The global reserve currency was at 94.88, at the time of writing, a single pip below the March 9 pandemic selloff bottom, making it the lowest level since Sept. 26, 2018, unless it climbs back one pip.

Strictly speaking, a new trend has been registered, putting the USD in a medium-term downtrend, as predicted by its Death Cross. The dollar remains in a long-term uptrend since the 2008 bottom. However, the March bottom can prove a support.

The weaker dollar continues to provide a leg-up for gold.

Gold Daily
Gold Daily

The yellow metal rallied for a fifth straight day, hitting $1,880, less than 0.5% from its Aug. 22, 2011 high of $1,895. It's now just 1.6% from its all-time high on Sept. 6, 2011 of $1,9911.60.

Oil rose for the third day out of four. It's now back above $42 a barrel, retesting Tuesday’s intraday highs.

Oil Daily
Oil Daily

Oil completed an ascending triangle, but still has to cross above the 200 DMA at the $43 level.

Up Ahead

Quarterly earnings continue, with reports due from Blackstone Group (NYSE:BX), Intel (NASDAQ:INTC), and Mattel (NASDAQ:MAT).

US weekly initial jobless claims print later on Thursday.

Market Moves

Stocks

  • Futures on the S&P 500 Index gained 0.3%.
  • The Stoxx Europe 600 Index increased 0.3%.
  • Germany’s DAX rose 0.4%.
  • The MSCI Asia Pacific Index climbed 0.2%.

Currencies

  • The Dollar Index fell 0.1 to 94.87, a five-day total of 1.5%.
  • The euro gained 0.1% to $1.1585.
  • The Japanese yen strengthened 0.1% to 107.09 per dollar.
  • The British pound was little changed at $1.2731.

Bonds

  • The yield on 10-year Treasuries declined one basis point to 0.59%.
  • Germany’s 10-year yield was unchanged at -0.49%.
  • Britain’s 10-year yield dipped less than one basis point to 0.117%.

Commodities

  • West Texas Intermediate crude gained 0.5% to $42.09 a barrel.
  • Gold strengthened 0.2% to $1,874.81 an ounce.
Opening Bell: German Consumer Sentiment Buoys Futures, Stocks; Gold Rises
 

Related Articles

Opening Bell: German Consumer Sentiment Buoys Futures, Stocks; Gold Rises

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email