Investing.com | May 18, 2020 07:02
US futures for the Dow Jones, S&P 500, NASDAQ and Russell 2000, as well as European stocks, advanced on Monday as investors' risk appetites were boosted by the prospect of reopening economies. In addition, positive corporate results out of Europe helped propel contracts and equities higher.
Oil and metals surged, driving commodity currency gains.
This morning, S&P 500 futures opened the trading week higher as loosened lockdown restrictions in California signaled that 75% of the Golden State's workers would be easing back to business. With the largest state economy within the largest global economy back online later today, investors were happy to continue narrowly focusing on good news while ignoring the bad.
That includes Fed Chair Jerome Powell's warning on Friday that stocks are likely to fall if COVID-19 worsens. He also noted that even as things currently stand, the economic slump could persist for at least another 18 months.
On Monday, S&P 500 futures jumped within a declining pattern whose upside breakout would render it a bullish flag. A fall below 2,700 would indicate a continued decline.
The outlook of a spike in commodity and product demand, as major economies return to business, buoyed sectors that have been suffering during the lockdown. Energy, mining and automobile producers led the STOXX Europe 600 Index higher.
During the Asian session, the digital board was completely green as warm weather has been enticing many economies to loosen restrictions that have kept much of the region indoors.
Australia’s ASX 200 outperformed, (+1.03%), as soaring iron ore and gold prices lifted the commodity exporter's local equities. China’s Shanghai Composite underperformed, (+0.24%), even after rising home prices suggested a gradual recovery. Still, tech shares offset much of that enthusiasm, after new US restrictions made the sale of crucial semiconductors to Huawei more difficult.
Despite market exuberance caused by the global easing of pandemic-related constraints, economic data this coming week will likely hit the US and global economies when they're already down: earlier today, though Japan's first quarter YoY GDP came in better than expected, it was still a breathtaking -3.4%. This week's new metrics will come after recent releases revealed the US was undergoing the worst jobs market since the Great Depression, along with the worst industrial production and retail sales on record.
The AUD/CNY pair found support at Thursday’s hammer, compounded by the 100 DMA, confirming the uptrend line since the April 21 low.
Silver gapped higher, adding 3.9% to a three-day rally that saw the white metal gain more than 13%.
This is the highest point for the precious metal since February, after it scaled above the 200 DMA.
Oil also gapped up, rising above $31, to a more than two-month high.
The price move has been driven by producers cutting production. However, due to its unprecedented subzero trough, it’s difficult to determine when a trend reversal for this particular commodity will take place. When excluding the negative pricing, at least one more trough is required before calling an uptrend.
Written By: Investing.com
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