Stocks To Extend Surge Higher On Recovery Optimism
Fiona Cincotta June 3, 2020 7:36 AM
As lockdown measures continue to ease, investors shrugged off geopolitical tensions and civil unrest on the streets of the US
As lockdown measures continue to ease, investors shrugged off geopolitical tensions and civil unrest on the streets of the US for Wall Street to finish at its highest level in three months.
Today’s PMI readings could be good example of the almost blind optimism in the markets. PMI readings for the Eurozone and the UK are expected. Spain is expected to see the service sector pmi rebound from 7.1 to 25 in May, whilst activity in Italy’s service sector is expected to have jumped from 10.8 to 26.5. The optimists in the market will focus on the huge improvement in activity in the sector, whilst the pessimists would be drawn to the fact that activity remain deep in contraction. As they saying goes, optimism is blind optimism.
Unemployment figures in Europe are expected to show a slow creep northward. However, the headline numbers are not expected to climb as high as US due to a range of government programmes that pay companies to keep staff employed even when they are not working.
Today’s US ADP reading is expected to be another fine example of how keen the market is to ignore economic scars being left behind. Expectations are for a 9 million drop in private payrolls in May. A shocking number by all accounts. However, it would be a significant improvement on April’s 25 million decline. With the markets so focused on the recovery, May’s numbers are not expected to cause a stir.
The broad risk on sentiment, a weaker US Dollar and improving supply and demand fundamentals are providing support for oil prices. According to API data, inventories declined -0.483 million barrels in the week 29th May, versus the addition of 8,731 million barrels the previous week. Attention is turning to the June OPEC meeting; traders are finding some reassurance from indications that Saudi Arabia and Russia are moving closer to agreeing a deal to extend output cuts.
WTI levels to watch
WTI is trading +2.5% in early trade at $37.87, it remains above the ascending trendline on 4 hour chart as it continue to cross the gap back towards early March’s pre- coronavirus $40.00 level.
Immediate resistance can be seen at $38.15 (overnight high) prior to $40.
Immediate support can be seen at 36.80 (today’s low) prior to $36.11 trendline support and $34.30 low (June 1st)
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.