Jasper Lawler,CMT
London Capital Group
European markets have opened with a softer tone on Thursday. There are some nerves before the release of what are likely to be very high US weekly jobless claims.
The FTSE 100 is off some 200 points in early trade. Investors in the UK are waiting for an interest rate decision from the Bank of England and more stimulus measures from the Treasury.
US jobless insurance claims are expected to skyrocket this week. Many businesses will have had to make layoffs to survive the impact of travel restrictions and stay-at-home orders. The consensus estimates is for a whopping 1.5 million weekly jobless claims. If we see a number above 2 million, markets will start clamouring for the next government or central bank bailout.
Wall Street completed its first consecutive daily gain on Wednesday. It's a small bullish milestone for the new bear market. The approval and then passing of the US stimulus bill has been the main driver for optimism. The $2 trillion (9% of US GDP) plan has gotten investors' seal of approval.
The S&P 500 rose 1.15% having come off gains over 5% at the end of the session. The Senate has now passed the $2 trillion spending bill, and it will be sent to the House of Representatives for approval on Friday.
Today's jobless figures will give us a first taste of whether $2 trillion is even enough.
Investors' thirst for cash has been quenched for the time being so the dollar continues to head lower. The dollar will likely resume its uptrend if global markets start to sell off again.
News that Prince Charles had contracted COVID-19 might have contributed to the volatility in Sterling on Wednesday afternoon. Under a constitutional monarchy, the health of senior Royals adds an extra complication to Britain's fight against the coronavirus. The pound has been recovering from 3-decade lows. A united front from the Bank of England and UK Treasury will go some way to it holding onto the gains.
We're not looking for the Bank of England to cut interest rates below the new record 0.1%. Negative interest rates now would probably just smack of desperation. There's also a widespread view that the negative rates experiment in the Eurozone has failed. Some level of coordination with the UK Treasury is likely with Chancellor Rishi Sunak expected to announce plans to support the self-employed.
Having reclaimed $1600 per oz in a massive two-day rally, gold is back below that key level on Thursday. Oil continues to languish near its lows.
Opening calls
S&P 500 to open 42 points lower at 2433
This information has been prepared by London Capital Group Ltd (LCG). The material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. LCG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. Spread betting and CFD trading carry a high level of risk to your capital and can result in losses that exceed your initial deposit. They may not be suitable for everyone, so please ensure that you fully understand the risks involved.
Recommended Content
Editors’ Picks
EUR/USD stays below 1.0700 ahead of US data
EUR/USD stays in a consolidation phase slightly below 1.0700 in the European session on Wednesday. Upbeat IFO sentiment data from Germany helps the Euro hold its ground as market focus shifts to US Durable Goods Orders data.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold price trades with mild negative bias, manages to hold above $2,300 ahead of US data
Gold price (XAU/USD) edges lower during the early European session on Wednesday, albeit manages to hold its neck above the $2,300 mark and over a two-week low touched the previous day.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.