Global financial markets extend gains on improved risk sentiment after an American biotech company Novavax said that it started the first human study of its experimental virus vaccine. Furthermore, markets have been getting support from the re-start of the global economic activity and from the new stimulus plans from China, despite the tensions in Hong Kong.

Coronavirus Update:

Global cases: More than 5.4 million
Global deaths: More than 346,200
U.S. cases: More than 1.6 million
U.S. deaths: More than 98,000

Market Reaction:

US futures traded 1% higher on Tuesday morning after coming back from Memorial Day holidays. The Dow Jones futures indicated an opening near the 25.000 level, while Nasdaq futures traded above 9.600.

Asian markets rose on Tuesday after China’s central bank said it would strengthen economic policy to support the economy. Nikkei and Kospi indices led the gains with 2%, despite the growing tensions between U.S and China.

Crude oil:

Crude oil prices gained 2% on Tuesday morning, supported from the expectation that the oil fundamentals will be balanced in coming weeks. The imbalance between demand and supply has decreased amid improved gasoline demand as more people have started using cars after lockdowns and from the ongoing supply cuts led by OPEC+ and US shale oil producers.

WTI crude price climbed above $34 per barrel while Brent crude traded at the $36 level. Both prices have gained more than 100% since they bottomed in late April.

Furthermore, oil prices received a boost yesterday after comments from Russian oil minister Alexander Novak, reporting the country’s oil output had nearly dropped to its target of 8.5 million bpd for May and June under its supply cut deal with OPEC.

Precious Metals

Precious metals had a strong rally supported from the weaker US dollar and tensions in Venezuela and Hong Kong. Gold price rose to $1.735/oz, up 0.5%, Silver up 2% to $17.50/oz, while Palladium price rallied 3% this morning by breaking above the key resistance level of $2.000/oz.

Forex Market:

Risk sensitive Australian & New Zealand dollars rose 0.5% against the safe-havens US dollar and Japanese Yen, benefiting from the improved risk sentiment and stock market rally.

The US dollar index dropped to the 99.60 level, its lowest since last week, while EUR/USD broke above 1.09 level, and GBP/USD rose near 1.225.
The Chinese yuan, a barometer of relations between US and China, fell to 7.143, though it remains near a two-month low of 7.16 hit on Friday.

Economic Calendar for May 26, 2020 (GMT+ 3:00):

Global financial markets and crude oil prices extended recent gains amid the optimism around a potential coronavirus vaccine, stimulus plans and re-opening of economies. The risk sentiment has improved, despite the rising tensions between US-China over Hong Kong’s legal status and the pandemic outbreak in Latin America.

Brazil has the second-highest number of confirmed coronavirus infections worldwide behind U.S., according to data from Johns Hopkins. The Latin American country has more than 350k cases and over 22k deaths. The US administration was considering imposing a travel ban on Brazil shortly after the country’s deadliest day on record from the pandemic.

The World Health Organization warns that the epicentre of the pandemic has shifted from Europe and the U.S. to South America.

Coronavirus Update:

Global cases: More than 5.4 million
Global deaths: At least 345,059
Countries with the most cases: United States (more than 1.6 million), Brazil (363,211), Russia (344,481), United Kingdom (260,916), Spain (235,772).

Market Reaction:

US and UK markets closed on Monday for Memorial Day and Bank Holidays, respectively. However, US futures traded slightly higher, extending last week’s gains as the US economy reopens, amid positive sentiment around a vaccine.

For last week, the US stock markets gained more than 3%, posting their best weekly performance since the start of April. Stocks rallied after positive news about a potential vaccine from Moderna, while Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said that Moderna’s vaccine data looked “promising”.

Asia markets rose on Monday morning despite the growing tensions between U.S and China. Nikkei and Kospi indices led the gains with 1%, while Hong Kong shares extended Friday’s losses after China announced a new national security law.

Crude oil:

Crude oil prices rose 1% this morning, offsetting Friday’s losses on concerns that a resumption of a trade war could damage oil demand.

However, oil prices posted gains for the fourth straight week, supported from recovering global demand and massive production cuts from OPEC and its allies. In addition, prices were boosted from the first signs of lower US crude inventories and the rise in gasoline and jet fuel demand as more people started using their cars and airplanes to travel.

Forex Market:

The US dollar was stronger across the board this morning, as investors prefer the safety of the greenback on rising US-China tensions over Hong Kong’s status.

The DXY-dollar’s index rose just below 100 level, while the EUR/USD fell below 1.09. In addition, the greenback was stronger against China-linked currencies of the Australian and New Zealand dollars amid concerns over trade tensions in the region.

Economic Calendar for May 25, 2020 (GMT+ 3:00):

Global financial markets fell on Friday morning as tensions in Hong Kong and between the US and China have escalated. The resumption of trade tensions between the world’s two largest economies, has raised worries about the Phase 1 trade deal signed in January 2020. Both geopolitical events have interrupted the recent rally in global markets and crude oil prices amid higher optimism for economic recovery after pandemic.

Hong Kong tensions:

Risk aversion sentiment has dominated the global markets since China announced plans to impose a new national security law on Hong Kong, after months of anti-government protests. The Chinese decision increased worries that the new law will give Beijing more control over Hong Kong, a former British colony that returned to Chinese rule in 1997 and threatens to spur further pro-democracy protests.

Hong Kong, which has become a leading financial and trade centre, is governed under the “one country, two systems” principle which is meant to guarantee a high degree of autonomy for the special administrative region of China.

Coronavirus Update:

Global cases: More than 5.1 million
Global deaths: At least 332,900
U.S. cases: More than 1.57 million
U.S. deaths: At least 94,702

Market Reaction:

Asian markets plunged on Friday morning, following the latest developments in Hong Kong and rhetoric around US-China tensions, as China plans to impose new national security laws for Hong Kong after months of anti-government protests. Hang Seng index led losses with 5%, while Nikkei and Kospi followed with 2% losses.

US markets fell 1% on Thursday, retreating from 2-months highs, on renewed tensions between the US and China. The Dow Jones Index closed at 24,474, down -0.4%, while the S&P 500 and Nasdaq Composite fell nearly 1%, on losses in tech sector.

In addition, the Dow Jones futures extended their losses this morning, indicating an opening near 24.260 or -0.7%, after President Donald Trump said that US would react strongly if China imposes national security laws for Hong Kong.

On Wednesday, May 20th, the US Senate passed a bill that would potentially delist Chinese stocks such as Alibaba and Baidu from U.S. exchanges. That measure was passed after President Donald Trump said in a tweet that the “incompetence of China” caused “this mass Worldwide killing,” referring to the coronavirus.

Crude oil:

The recent massive crude oil rally has interrupted after the renewed trade tensions and Hong Kong developments.

WTI and Brent crude oil prices were down more than 5% on Friday morning, traded at $32 and $34.50 per barrel respectively, as investors concern that a resumption of the trade war could damage the global economic recovery and hence, the crude oil demand.

Precious Metals:

Gold price fell 1% on Thursday as investors booked profits from recent rally and some switched to the safety of US dollar driven by growing trade tensions. Silver and Palladium prices also settled lower by 3% at $17 and $2.000/oz, respectively.

Forex Market:

The US dollar traded higher against all the major currencies, supported from safety flows, as investors worry about ongoing trade tensions and Hong Kong developments.

The DXY-dollar’s index rose to 99.70, up 0.3% while EUR/USD dropped back to 1.09 level. Furthermore, Australian and New Zealand dollars fell 0.8% against US dollar and Japanese Yen, on their economic ties with Chinese economy.

Economic Calendar for May 22, 2020 (GMT+ 3:00):

Global financial markets fell 1% on Tuesday, giving back some of the massive gains from the previous session, as investors raised concerns about the trial results for a potential coronavirus vaccine from Moderna. Gold and Silver prices extended their recent uptrend momentum, while the US dollar continued its downtrend.

Coronavirus Update:

Global cases: Around 4.9 million
Global deaths: More than 323,000
Top 5 countries: United States (More than 1.5 million), Russia (299,941), Brazil (271,885), United Kingdom (250,138), Spain (232,037).

Market Reaction:

Market volatility has surged since the start of the week, as investors feel excited over the prospect of a virus vaccine, while some remain concerned for a second wave of infections as global markets reopen.

US stock markets opened the week with very strong gains of 4%, cheering the vaccine positive developments from Moderna biotech company. However, the vaccine-related rally lost some steam yesterday, after a STAT News report raised concerns about the trial results for a potential coronavirus vaccine from Moderna. Shares of the biotechnology company dropped 10% together with the rest of the market, as the Dow Jones index lost 400 points or 1.6% to close at 24.206.

Asian markets were mixed on Wednesday morning trade, following the overnight losses from Wall Street. Nikkei and Kospi indices led the gains with 1%, while Chinese indices fell 0.5%.

Precious metals:

Gold price surged 1% yesterday, approaching once again the key resistance level of $1.750/oz. Silver price extended recent gains towards 2-months high of $17.60/oz, while Palladium trades just above the support level of $2.000/oz.

Precious metals gained support from the US dollar’s weakness, the monetary stimulus packages, zero interest rates and stock market volatility.

Crude Oil:

Crude oil prices rose 1% this morning supported from the ongoing supply cuts from OPEC, Russia, and US Shale producers. Furthermore, oil demand is gradually recovering as global economies reopen and economic activity restarts. WTI and Brent crude prices trade near monthly highs of $32 and $35 per barrel, respectively.

Forex Market:

Euro currency climbed near 1.10 against the US dollar, after France and Germany proposed a 500-billion-euro coronavirus bond program to support an economic recovery in the EU.

The US dollar has been the weakest currency across the board this week. The vaccine optimism combined with the improved sentiment, have reduced the safe-haven demand for the greenback.

The DXY-dollar’s index fell at 99.40 this morning, in response to the willingness of the Federal Reserve to extend its monetary stimulus to support the economy.

Economic Calendar for May 20, 2020 (GMT+ 3:00):

Global financial markets and Crude oil prices advanced higher on Monday, as investors cheered news that an experimental coronavirus vaccine from the biotech company Moderna, showed promising early-stage results. The positive early test results boosted risk sentiment as investors bet on a faster-than-expected economic recovery which could improve the demand for energies.

Coronavirus Update:

Global cases: More than 4.8 million
Global deaths: At least 318,303
U.S. cases: More than 1.5 million
U.S. deaths: At least 90,340

Market Reaction:

US markets had their best day in over a month yesterday, supported from news around the virus vaccine progress, the re-opening hopes after pandemic and growing expectations for more stimulus packages from the Federal Reserve to support the US economy.

The Dow Jones index closed at 24,597, up 3.9%, the S&P 500 gained 3.2% to close at 2,953 while the Nasdaq Composite advanced 2.4% to 9,234. Both indices, Dow Jones and S&P 500 had their biggest one-day gains since April 8th .

Moderna, an American pharmaceutical company reported “positive” phase one results for its potential coronavirus vaccine. The firm announced that after two doses, all 45 trial participants had developed coronavirus antibodies.

The positive trial results from Moderna, have strengthened investor’s confidence that a vaccine may be found faster-than-expected, rising the expectations for a quicker global economic recovery at a time where many countries continue efforts to reopen their economies.

Asian markets advanced on Tuesday morning on risk appetite sentiment, following the massive rally from Wall Street. Nikkei and Kopsi led the gains with 2%, while the Australian index moved lower after China imposed tariffs on cereal exports.

Crude oil:

Crude oil prices extended their massive rally yesterday, where the WTI contract finished the day with 8% profits, at $31.83, while Brent crude closed at $34.81, up 7%.

The rally in crude prices boosted after reports that the Chinese oil demand had fully recovered to pre-pandemic levels. In addition, the potential vaccine could improve the oil demand recovery much faster than the market expects.

Crude oil prices managed to double in value since the start of the month, getting support from the ongoing supply cuts from OPEC members and their allies led by Russia, the lower production from the US and Canada, combined with the first withdrawals in the storage stockpiles.

Precious Metals:

Gold and the rest of the precious metals, retreated from their intraday highs yesterday, as investors moved away from safety assets, in response to the coronavirus vaccine announcement and re-opening optimism after the pandemic.

Gold price fell 1% to $1.730/oz yesterday, reversing lower after hitting its highest since October 2012 at $1765/oz. Meanwhile, Palladium gained 5% to $2.030/oz after soaring more than 9% earlier, while Silver also jumped 3% to $17.10/oz

Forex Market:

The US dollar dropped across the board yesterday, as the improved risk sentiment and the stock market rally, reduced safe-haven demand for the greenback.

The DXY-dollar index against a basket of major currencies lost 1% right after the report of the potential vaccine. The weakness of the greenback helped the rest of risky currencies to advance higher. EUR/USD broke above 1.09, while Australian and New Zealand dollars hit fresh weekly highs.

Commodity-related currencies such as Canadian dollar, Mexican Peso, Norwegian Crone and Russian Rubble rallied against safe havens currencies, supported from the massive surge in crude oil and industrial metal prices.

Economic Calendar for May 19, 2020 (GMT+ 3:00):