Global stocks rally as investors cheer a new coronavirus drug
Global stocks rose today after a series of promising news. In the United States, Dow and S&P 500 futures rose by more than 3% and 2% respectively. In Europe, the DAX and FTSE indices rose by more than 3% while in Asia the Nikkei and China A50 rose by more than 1%. The rally happened as a drug manufactured by Gilead showed promising results in treating coronavirus. Such a drug would boost investors’ confidence that the pandemic is about to end. Meanwhile, Donald Trump announced new guidelines to reopen the economy. Finally, Boeing announced that it will start reopening its plants in Seattle while Procter & Gamble earnings beat analysts’ forecasts.
The euro rose against the dollar after the European Union inflation data met analysts’ forecasts. Data from Eurostat showed that the region’s headline CPI rose to 0.5% in March, which was slightly better than February’s 0.2%. The inflation was mostly dragged down by services and energy prices. The core CPI, which excludes the volatile food and energy products, rose from 0.4% in February to 1.1%. On an annualized basis, the CPI dropped from 1.2% to 1.0%. Earlier in the day, data from Germany, UK, and France showed that car registrations numbers dropped in March.
Other big news of the day came from China, which released its quarterly GDP data. The numbers showed that the economy shrank by an annualized rate of 6.8%. This was the first annual decline of the economy in more than 25 years. The economy dropped by 9.8% on a QoQ basis. Nonetheless, the economy showed that it is improving. For example, in March, its industrial production dropped by just 1.1%. This was much better than the 13.5% decline experienced in the previous month. Similarly, retail sales dropped by 15.8%, which was better than the previous decline of 20.5%. These numbers, coupled with the previous manufacturing and trade data show that the country is starting to grow again.
The EUR/USD pair rose to an intraday high of 1.0873 as the market digested Europe’s inflation data. On the hourly chart, the price is slightly above the 14-day and 28-day exponential moving averages. The price has also formed the three white soldiers’ pattern. This is an indication that the pair may continue rising during the American session and possibly reach the 1.0900 resistance level.
The USD/CHF pair dropped sharply today due to the overall weakness of the dollar. The pair dropped from a high of 0.9723 to an intraday low of 0.9668. On the 30-minute chart, the price is below the 14-day and 28-day exponential moving average. The RSI has dropped from a high of 65 to a low of 36 while the average true range has risen. The pair may continue declining as it targets the support of 0.9650.
The XTI/USD declined again as concerns of oil demand rose. The pair reached an intraday low of 25.00, which is closer to yesterday’s low of 24.80. On the hourly chart, the pair is trading along the 38.2% Fibonacci Retracement level. The price is also below the short and medium-term exponential moving averages. Therefore, there is a possibility that the pair will decline and test the 23.6% Fibonacci Retracement level of 23.65.