By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Geopolitics and the Federal Reserve drove the markets on Wednesday. European stocks finished higher following new record highs on Wall Street as investors brushed aside the virus concerns and the pace of recovery. 

Source: Bloomberg

Wall Street struggled to hold on to gains in the final hours of trading dragged by a dovish FOMC Minutes. Despite some improvement in the economic indicators, the policymakers are concerned about the ongoing health crisis on economic activity.

“The staff continued to observe that the uncertainty related to the economic effects of the pandemic was extremely elevated and that the unusual nature of the pandemic-related shock made assessments about how the economy might evolve in the future more challenging than usual.”

• The Dow Jones Industrial Average lost 85 points or 0.3% to 27,693.
• S&P 500 fell by 15 points or 0.4% to 3,375.
• Nasdaq Composite erased 65 points or 0.6% to 11,146.

Source: Bloomberg

Apple stood out on Wednesday and made history when it became the first US company to be valued at US$2 trillion. Its market value doubles in two years and its shares are currently priced at $462.83.

Source: Bloomberg

On the geopolitical front, the US ends the pact with Hong Kong on extradition and reciprocal tax treatment. We also note that the US President calls for the UN Security Council to restore all nuclear-related sanctions on Iran. 

Currency Markets

In the FX space, major currencies were weaker against the greenback. The US dollar made a strong comeback on Wednesday against its peers lifted by the FOMC minutes – the minutes provide both caution and less dovish tones that helped the US dollar to advance higher. 

Source: Bloomberg

On the economic front, attention was on the inflation data:

UK: The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.1% in July 2020, up from 0.8% in June 2020; the Consumer Prices Index (CPI) was 1.0% in July 2020, up from 0.6% in June 2020.

Eurozone: Eurozone annual inflation arrives at +0.4% in July while monthly inflation in the bloc drops by 0.4% in July. Core figures rose by 1.2% versus +1.2% previous and +1.2% expectations.  

Canada: The Consumer Price Index (CPI) rose 0.1% on a year-over-year basis in July, down from a 0.7% increase in June. Excluding gasoline, the CPI rose 0.7%. The CPI grew at a slower pace than in June as a result of a broad-based slowdown in price growth, spanning both goods and service

The British Pound was among the worst performers despite the better-than-expected inflation figures dragged by Brexit woes and fears of a second wave in Europe. The GBPUSD pair snapped four consecutive days of gains and fell to the 1.31 level. 

The Canadian dollar held better against a stronger dollar on the back of inflation data and higher commodity prices. The USDCAD pair rose from 1.31 level to 1.32 level. 

Commodities

Crude oil prices traded in familiar ranges. After a bullish API report, the EIA Crude Oil Stocks Change came in at -1.632M – lower than the expected -2.67M barrels. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading higher around $42.60 and $45.09 respectively.

Gold

A stronger US dollar has sent the precious metal to the downside. After Gold reclaimed the $2,000 level on Tuesday, the XAUUSD plunged to a low of $1,924. As of writing, the XAUUSD pair is currently trading around the $1,930 mark.

Source: GO MT4

By Deepta Bolaky
 @DeeptaGOMarkets

Key upcoming events

• Producer Price Index and Gfk Consumer Confidence (Germany)
• Industrial Production (Switzerland)
• CBI Industrial Production Survey (UK)
• ECB Monetary Policy Meeting Accounts (Eurozone)
• Jobless Claims, and Philadelphia Fed Manufacturing Survey (US)

Friday, 21 August 2020  Indicative Index Dividends Dividends are in Points
ASX200	WS30	US500	US2000	NDX100	CAC40	STOXX50
0.836	10.082	0.211	0.047	0	0	0
ESP35	ITA40	FTSE100	DAX30	HK50	JP225	INDIA50
0	0	0	0	0	0	0.647

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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