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While the US dollar was not in the position of strength on Monday, the Australian dollar (AUD) and the New Zealand dollar (NZD) both still depreciated against the weakened greenback. In theory the weaker economic fundamentals from China could have affected the Aussie, however given the recent push for an economic and political uncoupling it remains uncertain what real-life impact this data still has.
A moderate upside could be observed in the silver market. Otherwise gold continued trading side-ways and platinum prices turned lower. Oil prices were also down but not by a sizable margin.
Major cryptocurrencies moved higher over the past day, but the changes were still quite different between different cryptos. Bitcoin managed to gain well over three per cent compared to its value a day earlier and was trading at the highest level since early September. Ethereum prices on the other hand were almost flat, while the Bitcoin/Ethereum pair reached a new 10-days high.
Again a rather limited amount of fundamental data can be expected on Tuesday. Besides some speeches of Fed/FOMC officials on Tuesday in the US data on housing starts and permits will be released. Also the weekly Redbook Store Sales statistics will be published. Towards the end of the day the API releases its Weekly Statistical Bulletin.
Thanks to the weakening dollar, the EUR/USD pair was able to move quite close to the 1.18-mark on Monday. In this case not only the weakening dollar played a part but also the strength of the euro, which managed to improve against other major currencies including the pound sterling (GBP) and the Japanese yen (JPY). However, the Swiss franc (CHF) remained in an even stronger position as the EUR/CHF pair is close to the support level around 1.07, which after a considerable time was first really tested last week on Thursday.
While inflation remains relatively low in the eurozone, the German producer price index (PPI) was up by 0.4 per cent in September, a stronger than expected recovery. Still, compared to September last year the index is still down by one per cent (deflation).
After major stock markets moved lower on Monday, by Tuesday morning the sentiment was again somewhat more optimistic with indices like the Europe 50 and the Germany 30 trading well into the green. Still, the threat over a renewed lockdown due to the rising number of COVID-19 infections across Europe could also affect the market at some point. Multiple countries including the UK, Ireland and certain regions of Germany just to name a few examples introduced measures which come close to the lockdowns experienced in spring 2020, when the pandemic emerged as a global threat.
While the overall market sentiment remained mixed, especially airline companies like KLM AirFrance and Lufthansa were able to move noticeably higher. Shares of the aerospace company Airbus also continued to recover from the losses of the past week.
Multiple European companies will publish quarterly earnings on Tuesday, including UBS, Volvo, Vivendi and Vinci.
While oil prices came down from their recent high on Monday but the move was still rather restrained despite the relatively weak fundamentals from China and the rising number of coronavirus infections worldwide.
It remains to be seen how OPEC will position itself amidst these uncertain times. During a ministerial meeting of OPEC countries on Monday, Saudi Arabia’s representatives reiterated its responsibility to the market. However it remains unknown what the next course of action will be in terms of production cuts, which as per the current agreement should be eased at the beginning of 2021.
Oil and its derivates’ stockpile data in the US will be published on Tuesday by the American Petroleum Institute (API) and on Wednesday the Energy Information Administration (EIA).
For stock indices like the US 500 after the start of the US trading session the direction was mostly down into the red. It remains still unclear if the set deadlines for passing another stimulus deal before the Presidential elections next month will be met. The Democrats who control the House of Representatives set a deadline to reach a deal until Tuesday.
While stocks from most economic sectors ended the day deep in the red, there was one clear exception – the cannabis industry (Global Cannabis ETF +3.15%) where stocks like Canopy Growth Corp (+11.51%) and Tilray (+16.40%) strongly outperformed the market average. Investors might be bullish on the industry if expecting the US Democrat’s candidate to win in the Presidential elections as this could lead to more measures to decriminalize and regulate the industry, which is still criminalized at a federal level.
On Tuesday multiple companies are due to release their quarterly results. These will include Philip Morris, Lockheed Martin, Procter & Gamble, Prologis, Texas Instruments, Netflix and Snap.
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