It was a week characterised by fading US fiscal hopes, political noise, earnings and rising coronavirus cases across the globe.
Monday got off on a sour note as investors questioned the likelihood of more US fiscal support before the November 3 presidential elections. The constant back and forth between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin dampened the market mood, dragging the S&P 500 lower.
In the United Kingdom, it was all about the Pound and Boris Johnson’s October 15th Brexit deadline. We covered Pound crossed earlier in the week, discussing the possibility of Sterling tumbling on no-deal Brexit fears. Fast forward today, the Prime Minister has put the UK on high alert for a No Deal Brexit after accusing the EU of ending negotiations. Over the past few years, if there is something I have learnt about Brexit is to always expecte the unexpected.
Earnings season kicked off on Tuesday with JP Morgan releasing Q3 earnings. News that Johnson & Johnson was stopping its Covid-19 vaccine trial put a small dent on stock markets mid-week with most questioning whether there would be another pullback on the Nasdaq?
As risk aversion made an unwelcome return amid fading US stimulus hopes and the International Monetary Funds (IMF) bleak forecast, Dollar bulls entered the scene. We discussed the possibility of the Dollar Index trading towards the 94.00 resistance level, prices are trading around 93.70 as of writing.
The top five US banks reported remarkable earnings…but they still got not love. With less than three weeks until the US presidential elections, investors found little reason to add risk assets to their portfolios. This sentiment was reflected across equity markets on Wednesday.
Signs that the spread of the coronavirus was gathering pace and jump in the Vix Index left investor anxious. Is the best of the recovery behind us?. As political duels stall stock bulls and caution lingers in the air, is the party over for equity bulls? Time will tell.
The past few weeks have felt quite repetitive with the same themes pulling and tugging at global sentiment. It will be interesting to see the dynamics of the market after the US elections.
For my Gold lovers, it has been another range-bound week for the metal thanks to fluctuating expectations over the US fiscal stimulus, rising coronavirus cases across the world and jitters ahead of the US elections.
The precious metal is clearly waiting for a fresh directional catalyst to make the next major move either up or down. In regards to the technicals, Gold is down almost 1% this week thanks to an appreciating US Dollar. Should $1890 prove to be reliable support, prices may rebound towards $1935 and $1965, respectively. If prices break below $1890, the next key level of interest may be found around $1858.
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