ActivTrades’ Market Analysts prepared their daily commentary on traditional markets for April 14, 2020. This is not a trading advice. See details below:
FOREX
A resurgence in risk appetite is dominating markets on Tuesday morning, mainly driven by the prospect of several countries restarting their economies after an extended period of lockdown. The positive sentiment has so far kept the US dollar under pressure, as investors who sought refuge in the greenback are now moving back into risk-related assets. This switch is boosting the performance of the so-called commodity currencies such as the Canadian and Australian dollars, as well as the Norwegian krone, which are all up versus the US dollar, as markets can see light at the end of the tunnel as some of the countries most affected by the coronavirus pandemic prepare to return to work.
AUDUSD chart
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
Gold is skyrocketing as uncertainty continues to dominate with the price climbing to its highest level in seven years, breaking through the key threshold of $1,700 in the process in another signal of strength for bullion. This new rally isn’t related to a swift return of risk-off, but instead driven by the huge increase of the Federal Reserve’s balance sheet. Technically the trend remains bullish as investors are looking to gold as a safe haven in case there will be a second bearish shock to stock markets after the sharp decline seen earlier this year.
Carlo Alberto De Casa – Chief analyst, ActivTrades
European shares trade higher on Tuesday, following a long weekend for traders and building on the boost to market sentiment carried over from the Asian session. Today’s risk appetite comes amid investors welcoming the reassuring release of China’s trade balance release, which topped estimates, while traders’ appetite was further boosted by strong signs of an easing rate of infection in the region. Furthermore, investors were also pleased to see lower trends in other deeply impacted regions such as Spain, Italy and New York and even a potential date for the end of France’s lockdown, which was announced by President Macron yesterday.
However, investors now enter into what is expected to be a very uncertain earnings season, starting with big financial names like Goldman Sachs, Blackrock, Wells Fargo and JP Morgan Chase publishing their Q1 results today. Even if markets have already priced in significant impact to companies, uncertainty remains over the steps companies have taken to mitigate the negative effects of coronavirus on their results. Big diversified companies, generally exposed to more different risks than penny stocks, are likely to suffer a bigger hit with several dividend cuts expected across nearly all sectors.
Information technology, healthcare and staple consumer are the sectors providing the top moves on the Euro Stoxx-50 Index today while the CAC-40 is trading sideways with investors not sufficiently reassured by the potential date for the end of the lockdown looming in May.
CAC-40 chart
The market is currently trading above 4,500pts and is close to its major resistance found just below 4,575pts. A clearing of this level could extend the rally towards 4,680pts-4,810pts and 4,870pts by extension. However, a fall below its short-term support at 4,475pts would likely send the market back to its bearish trendline towards 4,330pts.
