ActivTrades’ Market Analysts prepared their daily commentary on traditional markets for April 22, 2020. This is not a trading advice. See details below:
Pound traders sighed in relief, as sterling gained ground, albeit modestly, against other currencies on Wednesday morning. A string of better than expected inflation data painted a rosier image of the British economy than some were bracing for. Today’s gains for the pound follow several consecutive sessions of losses against the euro and the dollar, with the markets seeing positive undertones in the UK March inflation data. Or to put it another way, while the year-on-year inflation at 1.5% isn’t great, at least there were no nasty surprises.
Ricardo Evangelista – Senior Analyst, ActivTrades
It’s now been a couple of weeks in which the correlation between gold and stock has been positive, with both moving in the same direction rather than their more typical inverse relationship. Yesterday saw stocks in red with gold also losing ground, while today bullion is recovering in conjunction with markets in green. Technically the price is again approaching the key level of $1,700. There is now quite a solid support zone placed at $1,675 and a clear break above $1,700 could open space for further rallies. The resistance areas, where we would expect gold to struggle to continue its recovery, are placed at $1,710, at $1,735 and $1,747, which is the recent high reached on April 14.
Carlo Alberto De Casa – Chief analyst, ActivTrades
Share markets opened mostly higher on Wednesday in Europe, despite a mixed Asian trading session overnight. The fact that market sentiment remains positive, despite mixed corporate results so far, can be seen as a “good news” at a time where many were expecting a much darker global picture due to the impact of the deadly virus.
However, earnings are still very hard to predict with many investors playing it by ear. The tech sector, with companies like SAP, Nokia and ASML, are helping to drive the Stoxx-50 higher today while energy shares are also in green territory despite yesterday’s extended decline on oil markets and ahead of today’s much anticipated US crude oil inventories data. Investors’ risk appetite is also being sustained by recent data from Germany where daily new Covid-19 cases are near the lowest in the last three weeks even as the country progressively lifts lockdown measures, which is seen as a very good sign by market operators.
The FTSE-MIB Index of Milan is one of the best performing markets today and is trading well above 16,500pts. However, the market remains capped by several resistance levels inside a consolidation phase with both moving averages trending lower. A return to the 16,000-16,280 points range, the lower band of the horizontal rectangle, remains the most likely technical scenario on a short-term basis.