News & Analysis

Overnight on Wall Street: Wednesday 12 August 2020

August 12, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

The performance of global stocks was mixed on Tuesday. European stocks advanced higher on the back of strong ZEW Economic Sentiment surveys. Wall Street struggled following the standoff by Congress over the stimulus relief package. Investors are worried that the delay in agreeing on the coronavirus relief package will cause more damage to the US economy. 

Major US equity indices ended in negative territory. The S&P 500 finished in negative territory after seven-day consecutive gains: 

  • The Dow Jones Industrial Average lost 105 points or 0.4% to 27,687.
  • S&P 500 fell by 27 points or 0.8% to 3,334.
  • Nasdaq Composite finished by 186 points or 1.7% lower to 10,783.


Source: Bloomberg

Currency Markets

In the FX space, the US dollar staged a comeback despite a slow start to the trading day. To the exception of the Canadian dollar, major currencies were weaker against the greenback.

On the economic front, we are seeing further signs of improvement in economic data:

  • Australia: Business conditions rose 8pts in July to 0 index points, continuing the recovery since reaching a trough in April. The improvement in conditions was broad-based across states but the monthly outcome was mixed across industries. However, Business confidence fell sharply in the month after rebounding strongly in recent months. Across all industries, retail and construction have the weakest confidence despite the relatively small declines in the month.
  • UK: Jobs data were mixed. The unemployment rate remained at 3.9% in June, but claims rose by 94.400, above the 10,000 expected.
  • Canada: The national trend in housing starts increased for a second month in July. The trend was 204,376 units in July 2020, up from 199,778 units in June 2020. The national trend in housing starts increased for a second month in July. The trend was 204,376 units in July 2020, up from 199,778 units in June 2020.
  • Germany: In August 2020, the ZEW Indicator of Economic Sentiment for Germany increased again significantly compared to the previous month, after having declined slightly in July. Expectations are now at 71.5 points, 12.2 points higher than in the previous month. 

Commodities

Crude oil prices were unable to hold on to Monday’s gains among the geopolitical tensions and a rising US dollar. On the data front, API report which shows a decline of -4.4M in crude oil stock in the week of August 07 but was lower from the previous -8.587M. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading around $41.60 and $44.60, respectively. The EIA report will be the highlight on Wednesday.

Gold

In the pandemic-induced environment and escalating geopolitical tensions, gold has been rallying. On Tuesday, the precious retreated from record highs dragged mostly by the renewed strength in the US dollar. The XAUUSD pair experienced the biggest daily drop in years. We expect traders to continue to monitor the main risk factors – US stimulus package, virus woes and the US-China tech war for fresh trading impetus. As of writing, the XAUUSD pair is currently consolidating around the $1,900 mark.


Source: GO MT4

By Deepta Bolaky
 @DeeptaGOMarkets

Key upcoming events

  • Westpac Consumer Confidence and Wage Price Index (Australia)
  • RBNZ Rate Statement, Interest Rate Decision, Policy Statement and Press Conference (New Zealand)
  • Manufacturing & Industrial Production, and Gross Domestic Product (UK)
  • FDI – Foreign Direct Investment (China)
  • 10-y Bond Auction (Germany)
  • Industrial Production (Eurozone)
  • NIESR GDP Estimate (UK)
  • Consumer Price Index and Monthly Budget Statement (US)
Thursday, 13 August 2020 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0.698 9.019 0.854 0.35 0.368 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 22.267 0 0 0 4.927


Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs. Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.

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