The upside for risk related trading seems to be fizzling out, amid mounting concern among investors that a potential resurgence of the coronavirus, at a time when most economies are reopening for business, could damage the prospects of a rapid V-shaped economic recovery. The US dollar, one of the safe havens of choice for many traders during the most acute phase of the great lockdown, appears to be staging a slow comeback as risk-off becomes more prevalent amongst investors.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
Volatility has declined on stocks in the last 48 hours and gold is following this trend with much smaller movements. Despite some intraday oscillation, the price has found its balance – at least for the time being – in a tight trading range between $1,715 and $1,730. Investors seem to be in a “wait and see” mode, waiting for a fresh stimulus to move markets and give a clearer directionality to the bullion price, which remains near its highest level in 7 and a half years without successfully challenging it.
Carlo Alberto De Casa – Chief analyst, ActivTrades
European share markets opened mostly lower on Thursday, following a similar trend overnight in Asia, as investors’ appetite for risk loses momentum. This decreasing interest towards riskier assets came after there were rises in infections in more and more locations, sparking fresh concerns about the economic recovery. Even if the recent reassuring macro data in both Europe and the US combined with unprecedented stimulus plans from central bankers recently brought strong support to the bullish trend, traders now deeply fear the economic consequences a second wave could have globally. Having said that, the threat is already having an impact on stock prices with trend consolidations almost everywhere, so the market will definitely need fresh signs of improvements before registering new highs. On the other hand, most benchmarks are likely to face a strong downside risk, leading prices to sharp corrections if the spread of the virus worsens.
The DAX-30 Index keeps on trading sideways between 12,175pts and 12,445pts following a break-out of its short-term bearish trendline. The market remains well supported by the zone between 12,075pts and 12,175pts as well as the 55-period moving average, which is still rising.
