Macro economics

Analytics on 26/06/2020. Equities mostly higher but the uncertainty persists

European stock markets climbed on Friday, but the impetus was limited amid a record rise in coronavirus cases in the U.S. According to data compiled by Johns Hopkins University, the U.S. has more than 2.4 million confirmed cases and more than 124,000 deaths as of today. Further warnings about a second market meltdown from the International Monetary Fund capped gains as well.

In individual stocks, Wirecard shares tumbled another 48% early in Friday’s session after the company filed for insolvency yesterday, unable to account for a $2.1 billion black hole in its balance sheet and owing $4 billion to creditors. H&M reported a fall in its second-quarter sales by 50% amid the pandemic that forced the Swedish retailer to close 80% of stores during the worst of the lockdown. The company’s stocks fell 2% following the report.

Meanwhile, European Central Bank President Christine Lagarde said the worst of the coronavirus crisis may be over for the global economy, but warned that the road ahead would not be easy. Against this backdrop, the UK’s FTSE 100 adds 1.63% to 6,247. Italy’s FTSE MIB edges higher by 1.41 percent to 19,505, France’s CAC 40 adds 1.51 percent to 4,992, while German DAX 30 rises by 0.87 percent to 12,283. U.S. stock index futures are trading modestly lower after the Federal Reserve announced the results of its latest stress tests that showed that all major banks remain well-capitalized. New worries about rising coronavirus cases in many states continue to suppress US stocks.

In currencies, the euro turned slightly higher on Friday following two days of losses. Despite the EURUSD pair has settled above 1.12, the recovery potential looks limited while downside risks persist. The immediate resistance arrives around 1.1240, and as long as the pair remains below this level, the euro remains vulnerable to further losses. Despite the recent sell-off, the common currency remains positive on the weekly timeframes after two consecutive weeks of losses.

Meanwhile, oil prices are trading in a flat manner on Friday after yesterday’s bounce from local lows below the $40 handle. The rising number of new coronavirus cases in the United States and China continue to fuel worries about a recovery in global oil demand. The prospect of increased US crude production cap gains as well. On the positive side, fresh supportive measures from central banks and governments give some hope for traders. As such, the market tone is neutral at this stage, suggesting some consolidation could be ahead in the short term.

Nathan Lambert, Head of Global FX Analytical Department

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Interest rates

Country Rate Value
USA Federal Funds 0,25 %
Switzerland 3 Month LIBOR Range -0.75 %
United Kingdom Repo Rate 0,10 %
EU Refinancing Tender 0,00 %
Japan Overnight Call Rate -0,10 %
New Zealand Official Cash Rate 0,25 %
Australia Cash Rate 0,25 %
Canada Overnight Rate Target 0,25 %
All rates
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