Markets.com Logo
euEnglish
LoginSign Up

Flattening the curve? Equities pull back

May 21, 2020
4 min read
Table of Contents

    The daily rate of global coronavirus has hit a new high of 106,000. Whilst the likes of Italy, Spain and Britain get things under some degree of control, elsewhere it’s not looking so good. Of course, the economic effects of the pandemic have very little correlation with the disease, but the response by governments to lock down. The worry is second and tertiary waves are coming, and developed nations fall back on their lock down playbook. It’s far from over.

    Markets remain choppy as investors play the waiting game, whilst oil prices have risen again as inventory data painted a bullish picture. PMIs from Europe this morning show improvement but coming off an exceptionally low base in April. Germany’s services PMI jumped from 16.2 to 31.4. France’s rose from 10.2 to 29.4.

    It’s a step in the right direction, but remember how these PMIs are calculated – respondents can only answer if the state of their industry is better, worse or the same as the month before. Contraction is still the state of play. Overnight data showed Japan’s exports down 21.9%, the worst decline since 2009; whilst South Korean exports also plunged.

    Stocks rose yesterday but eased back today as Asian trade data worried investors. The S&P 500 hit its best intra-day level since March 6th at 2980 (2985 on March 6th was the high), closing at 2971 vs the close of 2972 on that day. The 200-day simple moving average sits just above but the 100-day line has provided the topside resistance for the last two sessions. Futures indicate a lower open.

    The FTSE 100 rose 1% on Wednesday but handed back the gains at the open as European stocks faded. Equity indices are near or at the top of the ranges are still posting weekly gains. The US is creeping ahead of the pack with big tech driving things – Facebook soared yesterday after it announced a new e-commerce business that could take on Amazon. The Nasdaq rose 2%, ahead of the broad market, and is up for the year and not far away from its all-time highs.

    Oil prices rose firmly after a bullish inventory report from the EIA. Crude stockpiles declined by 5m barrels in the week to May 15th, against an expected build of 1.2m barrels. But it was less bullish when you dig deeper into the report. Gasoline stocks rose 2.8 million barrels vs an expected 2.1m drop. Distillate stockpiles were up by 3.8 million barrels, which was more than expected.

    WTI (Aug) pushed up above $34 and is looking to close the March 6th-9th gap. Oil is riding higher on great-than-expected loss of output in the US. After the EIA this week predicted a sharp decline in US output next month, the concern will be that higher prices sees the taps opened again.

    Andrew Bailey, the governor of the Bank of England, chose his moment well: just as he told MPs that the Old Lady is prepared to consider negative rates, a UK gilt auction delivered a negative interest rate on three-year paper.

    The fact that the government can get paid to borrow money shows just how much central banks have already become ‘the market’ for sovereign debt. The problem is, as discussed in a recent note, getting out of a negative rate cycle is tricky and the Eurozone and Japan are hardly poster children of monetary policy success.

    Minutes from the Fed’s last meeting were also released yesterday and showed a willingness to look at yield curve control, and still indicated no desire to go down the negative rate path. Once you go down it, it’s exceptionally difficult to get out. Moreover, it’s bad for banks and the financial system and doesn’t make consumers more likely to get out and spend.

    Chart: SPX tests 100-day resistance


    Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. 

    Written by
    SHARE

    Markets

    • Palladium - Cash

      chartpng

      --

      0.23%
    • EUR/USD

      chartpng

      --

      -0.18%
    • Cotton

      chartpng

      --

      -0.22%
    • AUD/USD

      chartpng

      --

      -0.16%
    • Santander

      chartpng

      --

      2.01%
    • Apple.svg

      Apple

      chartpng

      --

      0.03%
    • easyJet

      chartpng

      --

      -0.56%
    • VIXX

      chartpng

      --

      -0.88%
    • Silver

      chartpng

      --

      -0.05%
    Table of Contents

      Related Articles

      VAPE Stock Soars 600%: What’s Happening with CEA Industries?

      VAPE Stock Soars 600%: CEA Industries, known by its ticker symbol VAPE, has recently seen a remarkable surge in its stock price, soaring by 600%.

      Ghko B|about 18 hours ago

      DJT Stock Dips: What’s Going on with Trump Media?

      DJT Stock Dips: Trump Media & Technology Group (TMTG) has become a focal point in the media landscape, especially with the launch of its social media platform, Truth Social.

      Frances Wang|about 18 hours ago

      Trending Stocks Today: PLTR Stock , MCVT Stock, SMCI Stock, NVDA Stock

      Trending Stocks Today: in the ever-evolving landscape of financial markets, certain stocks catch the attention of market participants due to their innovative approaches and strategic developments.

      Frances Wang|2 days ago
      Markets.com Logo
      google playapp storeweb tradertradingView

      Contact Us

      support@markets.com+12845680155

      Markets

      • Forex
      • Shares
      • Commodities
      • Indices
      • Crypto
      • ETFs
      • Bonds

      Trading

      • Trading Tools
      • Platform
      • Web Platform
      • App
      • TradingView
      • MT4
      • MT5
      • CFD Trading
      • CFD Asset List
      • Trading Info
      • Trading Conditions
      • Trading Hours
      • Trading Calculators
      • Economic Calendar

      Learn

      • News
      • Trading Basics
      • Glossary
      • Webinars
      • Traders' Clinic
      • Education Centre

      About

      • Why markets.com
      • Global Offering
      • Our Group
      • Careers
      • FAQs
      • Legal Pack
      • Safety Online
      • Complaints
      • Contact Support
      • Help Centre
      • Sitemap
      • Cookie Disclosure
      • Awards and Media

      Promo

      • Gold Festival
      • Crypto Trading
      • marketsClub
      • Welcome Bonus
      • Loyal Bonus
      • Referral Bonus

      Partnership

      • Affiliation
      • IB

      Follow us on

      • Facebook
      • Instagram
      • Twitter
      • Youtube
      • Linkedin
      • Threads
      • Tiktok

      Listed on

      • 2023 Best Trading Platform Middle East - International Business Magazine
      • 2023 Best Trading Conditions Broker - Forexing.com
      • 2023 Most Trusted Forex Broker - Forexing.com
      • 2023 Most Transparent Broker - AllForexBonus.com
      • 2024 Best Broker for Beginners, United Kingdom - Global Brands Magazine
      • 2024 Best MT4 & MT5 Trading Platform Europe - Brands Review Magazine
      • 2024 Top Research and Education Resources Asia - Global Business and Finance Magazine
      • 2024 Leading CFD Broker Africa - Brands Review Magazine
      • 2024 Best Broker For Beginners LATAM - Global Business and Finance Magazine
      • 2024 Best Mobile Trading App MENA - Brands Review Magazine
      • 2024 Best Outstanding Value Brokerage MENA - Global Business and Finance Magazine
      • 2024 Best Broker for Customer Service MENA - Global Business and Finance Magazine
      LegalLegal PackCookie DisclosureSafety Online

      Payment
      Methods

      mastercardvisanetellerskrillwire transferzotapay
      The www.markets.com/za/ site is operated by Markets South Africa (Pty) Ltd which is a regulated by the FSCA under license no. 46860 and licensed to operate as an Over The Counter Derivatives Provider (ODP) in terms of the Financial Markets Act no.19 of 2012. Markets South Africa (Pty) Ltd is located at BOUNDARY PLACE 18 RIVONIA ROAD, ILLOVO SANDTON, JOHANNESBURG, GAUTENG, 2196, South Africa. 

      High Risk Investment Warning: Trading Foreign Exchange (Forex) and Contracts For Difference (CFDs) is highly speculative, carries a high level of risk and is not appropriate for every investor. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. Please read the full  Risk Disclosure Statement which gives you a more detailed explanation of the risks involved.

      For privacy and data protection related complaints please contact us at privacy@markets.com. Please read our PRIVACY POLICY STATEMENT for more information on handling of personal data.

      Markets.com operates through the following subsidiaries:

      Safecap Investments Limited, which is regulated by the Cyprus Securities and Exchange Commission (“CySEC”) under license no. 092/08. Safecap is incorporated in the Republic of Cyprus under company number ΗΕ186196.

      Markets International Limited is registered  in the Saint Vincent and The Grenadines (“SVG”) under the revised Laws of Saint Vincent and The Grenadines 2009, with registration number  27030 BC 2023.

      Close
      Close

      set cookie

      set cookie

      We use cookies to do things like offer live chat support and show you content we think you’ll be interested in. If you’re happy with the use of cookies by markets.com, click accept.