News & Analysis

Overnight on Wall Street: Thursday 15 October 2020

October 15, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

The US stimulus gridlock, earnings, Brexit woes, the rising number of coronavirus cases in Europe and vaccines updates drove risk sentiment on Wednesday. Global equities struggled to rebound as another company, Johnson & Johnson paused a late-stage trial of COVID-19 vaccine while they are investigating the adverse reaction from a participant.


Source: Bloomberg

Another day of red for major equity indices in the European and US markets:

  • The Dow Jones Industrial Average lost 166 points or 0.6% to 28,514.
  • S&P 500 fell by 23 points or 0.7% to 3,489.
  • Nasdaq Composite erased 95 points or 0.8% to 11,769.

On the earnings front, corporate earnings by major banks were mixed. Unlike JP Morgan and Citigroup, Bank of America and Wells Fargo’s corporate results were disappointing as they saw a profit hit. On the other side, Goldman Sachs posted a surge in quarterly profit. 

Currency Markets 

In the FX space, major currencies pairs remained in familiar levels as traders are cautious amid the series of uncertainties on the geopolitical and economical front.


Source: Bloomberg

Amid a relatively subdued economic calendar, the forex market was mainly driven by markets’ sentiment. The British Pound rebounded strongly compared to other currencies on the headlines that Brexit talks will extend beyond the self-imposed deadline by the UK Prime Minister on October 15. The GBPUSD pair rallied above the 1.30 level. 

For the chart of the day, Adam Taylor takes a look at the USDCHF pair:

With the US Dollar Index trending lower combined with generalised political tensions worldwide, USDCHF appears to be selling on rallies and attracting much of the risk-off flow.

October has seen a steady decline for the pair and produced a downward bearish channel, as shown above. It would seem the 92.00 region is beyond buyers at this stage as price action is unable to sustain any viable attempts above these levels.

The top of this bearish channel links up with the 200 MA (yellow line), acting as strong resistance in the short-term. We also notice some price divergence concerning the RSI indicator that suggests a further sell-off may emerge in the coming days.

To the upside, bulls will be seeking confirmation of some consecutive candle closes above the 200 MA line as a litmus test for a change in overall sentiment. Upside targets include 91.97 and 92.96. Alternatively, if the strength of the current resistance levels continues, we may well see USDCHF sink below 90.00 levels in both the short and longer-term time frames.

Commodities

Crude oil prices advanced on Oil Market Report- October 2020 by the IEA and API report. As per the October report, volumes of crude oil held in floating storage fell sharply by 70 mb (2.33 mb/d) to 139.1 mb in September. The IEA is also predicting a significant stock draw in the fourth quarter. 

The API report has shown that crude oil stock fell from previous 0.951M to -5.42M in the week ending October 9. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading firmer at around $41.22and $43.32respectively.

Gold

The precious metal gained some upside momentum on a weaker US dollar. However, the XAUUSD pair remained underpinned by the US stimulus gridlock. The pair climbed higher above the $1,900 mark but failed to hold the momentum.


Source: GO MT4

By Deepta Bolaky
 @DeeptaGOMarkets

Key upcoming events

  • European Council Meeting (Eurozone)
  • Consumer Inflation Expectations and NAB Business Confidence, Full Time Employment, Employment Change and Unemployment Rate (Australia)
  • Consumer and Producer Price Index (China)
  • Jobless Claims and Philadelphia Fed Manufacturing Survey (US)
  • BoC’s Lane Speech (Canada)
  • Autumn Forecast Statement (UK)
Friday, 16 October 2020 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0 0 0.063 0 0 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 0 0 0


Disclaimer:  The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

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