ActivTrades’ Market Analysts prepared their daily commentary on traditional markets for February 5, 2020. This is not a trading advice. See details below:
FOREX
For the second consecutive day the yuan is recovering some of the lost ground to the US dollar. This is because the World Health Organisation believes the coronavirus hasn’t yet shown signs of mutating, which would make it more lethal. Officials from the WHO also stated their belief that the outbreak can be contained. This came as something of a relief at a time when some businesses are starting to notice the impact of lower levels of economic activity in China, due to the restrictions imposed on the circulation of people in some of the country’s main urban centres.
Ricardo Evangelista – Senior Analyst, ActivTrades
GOLD
The recovery of the risk-on scenario pulled up stocks while investors reduced their positions on gold. The selloff seen on the gold market found a solid support level at $1,550 and prices are rebounding after this strong correction.
Technically the short-term trend remains weak, as the price has broken a different support level before reaching $1,550. The area from $1,565 to $1,572 now represents the first resistance levels for bullion, while a fall below $1,550 would open space for further corrections.
Carlo Alberto De Casa – Chief analyst, ActivTrades
OIL
Despite the return of a risk-on scenario, WTI fell below $50. This is confirming that investors, although seeing less risk from the coronavirus, still think that there will be a significant impact on the Chinese and global demand for oil and this is the main reason why the price of oil was unable to rebound despite renewed market optimism.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
European markets had a mixed opening, setting the trend for US futures on the S&P 500, as investors took some profits after yesterday’s strong rally. However, the risk-on mood isn’t dead yet as all European benchmarks edged significantly higher shortly after the opening bell. An extension of the current recovery is now a real possibility as investors digest good corporate earnings as well as reassuring news coming from China about the coronavirus likely peaking on the 21st of February. In addition, China also confirmed one of its universities has found an “effective” drug to treat people with the deadly virus. Investors didn’t need much to change their trading stance and bought the dip on risky assets ahead of today’s Christine Lagarde’s speech at the ECB as well as the highly awaited US job reports due on Friday.
In Europe, gains in construction and tech shares are offsetting declines by oil and household goods. The best performance is coming from both the OMX-30 Index of Stockholm and the DAX-30 in Frankfurt with many investors awaiting Q4 2019 earnings reports from BNP Paribas, Spotify and General Motors today. The DAX-30 Index is challenging its first resistance below 13,375pts, where a break-out could lead prices up to 13, 515pts and 13,600pts by extension while support levels can be found at 13,290pts and 13,240pts.
DAX-30 Index chart
Pierre Veyret– Technical analyst, ActivTrades