ActivTrades’ Market Analysts have prepared for LeapRate their daily commentary on traditional markets for August 6, 2019. See details below:
GOLD & OIL
It is quite clear that the trade war is having opposite impacts on gold and oil prices. The barrel is a victim of this scenario: the price has collapsed last week and has been unable to recover in the last few days as investors see further risks and the possibility of a serious impact on world economic growth. On the other hand, gold reached yesterday a fresh 6-year peak. Bullion is taking advantage of this complex scenario, with investors betting on the precious metal given the growing risk associated to the trade war, but also because of expectations of a more dovish Fed going forward.
Despite a moderately hawkish Jerome Powell in the last meeting, according to the CME Fedwatch tool, the majority of investors is expecting at least another two rate cuts by the end of the year and the gold rally is just the obvious consequence of this.
Carlo Alberto De Casa – Chief analyst, ActivTrades
EUROPEAN SHARES
European shares opened mixed this morning as benchmarks pared some of yesterday’s losses after investor sentiment was boosted by the US reaction to the Chinese currency devaluation. US Secretary of Treasury Steven Mnuchin announced that the government will engage with the IMF to “eliminate this unfair competitive advantage”. At the same time, President Trump asked the Federal Reserve to take measures to protect the US economy against the effects of the trade war. This makes traders expect further monetary easing and the odds are now in the direction of a 100 basis points cut by 2020. In the near term, the spectrum of a recession seems to be offset by optimism surrounding a more dovish Fed.
In Europe, most benchmarks are struggling to stay in green territory. The Stoxx-50 index is trading above 3,300.0pts, with 3,325.0pts in sight while bulls on the DAX-30 are aiming to clear the 11,700.0pts level. The best performance is being registered by the French CAC-40, with the rise driven by VIVENDI (+9%) after the company confirmed they are in talks with Tencent to sell 10% of Universal Music Group.
Pierre Veyret– Technical analyst, ActivTrades