With optimism almost bordering on euphoria dominating sentiment of investors, one would be forgiven for assuming that all is rosy in the real economy; global equities continue to pile up gains and other risk related assets are also approaching pre-pandemic levels. During early Friday trading the euro touched maximums not seen since March 10th, at the start of the debacle caused by the coronavirus fallout. This follows events on Thursday, when the single currency received a massive boost as the ECB announced an increase in its bond purchase scheme of €600 billion, taking the total figure to a staggering €1.35 trillion. The European central bank is using its ‘bazooka’, in a clear demonstration of willingness to do whatever it takes to ensure the single currency will emerge alive from the coronavirus crisis.
Ricardo Evangelista – Senior Analyst, ActivTrades
The general optimism seen on markets is giving further fuel to the rally in oil. There is growing confidence of a swift economic recovery after the Covid19 shock, sustained by central banks’ hyper expansive monetary policies, while the number of new coronavirus infections starts to slow down in many countries.
WTI price (July expiry) is playing with the level of $38 a barrel, while prices are in the middle of the gap left open in March, when a deal between OPEC+ was not reached and coronavirus lockdown started in Italy and other countries, causing a temporary collapse in demand.
Carlo Alberto De Casa – Chief analyst, ActivTrades
A raft of bullish factors saw European Stocks open significantly higher, following the tone set by Asian markets overnight, and with US Futures also pointing to a firmer open, trading optimism has rarely been this high.
The party goes on for stock traders after the ECB surprised investors by announcing a higher than expected top-up to its rescue plan, boosting confidence in stock markets and sending prices to new highs. This sentiment is also being shared by US stock investors after Washington also unveiled an unprecedented USD 1 trillion plan to fight the pandemic effect. Meanwhile, existing bearish leverages vanished after pandemic easing continued to pile up in many different regions, while investors also cheered the latest softer tone in US-Sino relationship, allowing the current euphoria to continue further.
The main market mover remains the US Job report today with investors expecting a significant increase which could drive prices even higher, close to their pre-crisis level ahead of the weekend.
The Spanish IBEX-35 index has registered the best performance in Europe so far, after the market successfully cleared the 7,500 Pts level (38.2% Fibonacci) following the exit of the horizontal consolidation phase seen recently. Prices will now head towards the next major technical resistance at 8,000 Pts, with 7,650. Pts the first support level.