European Equity Markets rallied yesterday after German Chancellor Angela Merkel told lawmakers that she expects European Union Leaders to agree on a regional recovery fund next month. Helping the DAX to rally was the announcement that Germany’s Cabinet approved the issuance of Euro 63 Billion in debt to fund the Country’s stimulus package. Meanwhile US Indices fluctuated between gains and losses before selling off in the last hour of trading to close lower for the first time in four days. The S&P 500 closed 0.33% lower at 3113 in a quiet session. Energy, Real Estate and Financials leading the declines while Apple and Microsoft helped the NASDAQ to close in positive territory near last week’s all-time high. Texas reported a 11% surge in hospitalisations while China continues to try and suppress the virus by cancelling flights to and from Beijing. In his Testimony to the House Financial Services Committee, Fed Chairman Powell said that the economic shutdown due to the Coronavirus outbreak required an unprecedented policy response. He noted that Second- Quarter growth could be the worst on record. Powell said that unless drastic action was taken by the Fed to rejuvenate growth then the downturn could grow worse. He then stated that we are now seeing some green shoots of recovery as States started to ease restrictions and restart their economies. Powell also noted that the Fed has been purchasing sizeable amounts of Treasuries and Mortgage-Backed securities over the past 10 weeks. The Fed Chairman expects to see large numbers of people go back to work as the economy bounces back. There is no doubt that the Employment Data is going to be key in the months ahead. U.S Trade Representative Robert Lighthizer also testified before Congress yesterday. He said that China is on track with their purchase of Agriculture under the Phase One Trade Deal. Elsewhere, Gold closed flat while Crude had a small fall after two consecutive advances. Overnight, Asian Stock Markets fell on concerns over the increasing amounts of infections in the region.
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Equities
The S&P 500 closed 0.33% lower at a price of 3113 on low volume.
The Dow Jones Industrial Average fell 170 pints for a 0.70% loss to close at 26,119.
The NASDAQ 100 rose 0.33% to close at 9982.
Stoxx Europe 600 Index advanced 0.5%.
The MSCI Asia Pacific Index closed flat at 528.36.
This morning the Nikkei closed 0.45% lower at 22,355.
Currencies
Here is a summary of the main Changes in F.X. Markets:
The Euro decreased 0.3% to $1.1235.
The Japanese Yen closed 0.3% higher at 107.05 per Dollar.
The British Pound fell 0.1% to 1.2550 per Dollar.
Bonds
The yield on 10-year Treasuries fell two basis points to 0.73%.
Germany’s 10-year yield gained four basis points to -0.39%.
Britain’s 10-year yield closed unchanged at 0.208%.
Commodities
West Texas Intermediate crude fell 1.8% to $37.67 a barrel.
Gold closed unchanged at $1725.
This morning on the Economic Front we have Euro-Zone Economic Bulletin at 9.00 am and this is followed by the Bank of England Policy Meeting announcement at 12.00 pm. The Bank of England will also release the Minutes from the last Meeting at the same time. At 1.30 pm we have the U.S Weekly Jobless Claims where the expectation is for another 1.3 million would have lost their jobs. Finally, we have the Philly Fed Manufacturing Survey also at 1.30 pm.
September S&P
Having traded sideways for most of yesterday’s session we saw a small sell-off into the close. This ‘’risk off’’ continued overnight in Asia with the S&P trading lower to my initial 3085 buy level with a 3075 low print before rallying to my 3102 T/P level and I am now flat. I am still expecting the S&P to hold up until the June Contract expire tomorrow. I have now rolled to the September Contract which trades at a 10 Handle Discount to the June Contract. The September Contract has support from 3075/3088 where I will be a small buyer with a 3063 stop. My only interest in selling the September Contract is on a further rally to 3155/3170 with a 3183 stop.
EUR/USD
Thankfully. Just after I posted yesterday morning the Euro rallied to my 1.1290 T/P level on Tuesday’s 1.1260 long position and I am still flat. The Euro has support from 1.1150/1.1190 where I will be a buyer with a 1.1105 stop. I will now lower my sell level to 1.1380/1.1420 with a 1.1455 tight stop. Remember a break and close over 1.1400 is bullish and will see me look to set up a long position.
September Dollar Index
No Change as I am still a small seller from 97.35/97.75 with the same 98.10 stop.
September DAX
I have now rolled to the September Contract which trades at a 25 point Discount to the June Contract I will continue to be a buyer in the September Contract on any further dip lower to 12130/12205 with the same 12075 stop.
September FTSE
I have now rolled to the September Contract which trades at a 40 point Discount to the June Contract which expires tomorrow. Overnight the June Contract traded lower to my 6180 buy level before bouncing to my revised 6195 T/P level and I am now flat. The September Contract has support from 6080/6125 where I will be a strong buyer with a 6035 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
My Dow plan worked well with the market trading lower overnight to my 25900 buy level with a 25755 low print before rallying to my 25980 revised T/P level. Subsequently the Dow spiked above 26150 and is currently trading at 26110 as I go to press. The Dow has strong support from 25700/25950 where I will again look to buy the market with a 25550 stop. Frustratingly the Dow just missed my 26650 sell level with a 26615 high before selling off. Today I will leave my 26650/26850 sell level unchanged with the same 27010 stop.
September NASDAQ
I have now rolled to the September Contract which trades at a small 10 pints Discount to the June Contract. The NASDAQ has strong resistance from 10070/10200 where I will continue to be a seller with the same 10275 stop. The NASDAQ has support from 9800/9880 where I will be a small buyer with a 9725 tight stop.
September BUND
The Bund fell shy of my 174.65 buy level with a 174.79 low print before rallying to trade at 175.30 this morning. I will now raise my buy level to 174.50/174.90 with a higher 174.15 stop.
Gold Rolling Contract
The boring sideways action in Gold continues and I am still flat. I do not trust Gold and I am reluctant to chase the market higher. Therefore, I will leave my 1688/1698 buy level unchanged with the same 1679 stop.
Silver Rolling Contract
I am still flat Silver and today I will again raise my buy level to 16.70/17.10 with a higher 16.35 stop. If I am taken long I will have a T/P level at 17.35.
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