Global stocks rally as the market predicts an end to trade wars
Global stocks rallied while volatility fell as traders reacted to the outcome of the US election. During the weekend, Joe Biden crossed the important 270 electoral college votes, making him the next president of the United States. While Donald Trump has filed court injunctions, analysts believe that he will not succeed. A Biden victory means that Trump’s trade wars will end since Biden has promised to take a tactical approach in dealing with China. It also means that Trump’s lower taxes will remain since Republicans will possibly retain the senate.
In the US, futures tied to the Dow Jones, S&P 500, and Nasdaq 100 indices rose by more than 1.50%. While in Europe, the DAX and FTSE 100 indices rose by more than 1%. In Japan, the Nikkei 225 index rose to 1991 high.
The Swiss franc moved sideways today as traders reacted to impressive employment numbers from Switzerland. According to the Swiss statistics office, the country’s unemployment rate dropped from 3.4% in September to 3.3% in October. That decline was better than the 3.4% that analysts polled by Reuters were expecting. This rate is also lower than the 7.6% unemployment rate in the US. The market also reacted to the latest data that showed that the number of new infections in the country was falling. According to the statistics office, the number of new infections dropped from 21.8k on Tuesday last week to 10k on Friday.
The euro was little changed as traders reacted to the mixed trade numbers from Germany. According to the country’s statistics office, exports rose by 2.3% in October after rising by 2.9% in the previous week. The numbers were slightly better than the consensus estimates of 3.3%. In the same month, imports declined by 0.1% after rising by 5.8% in the previous month. It was worse than the consensus estimates of 2.1%. As a result, the German trade surplus increased from 15.48 billion euros to 17.8 billion euros. Meanwhile, the currency is unchanged ahead of the ECB’s annual forum that is set for this week.
The EUR/USD pair is trading at 1.1880, which is an important resistance level, as shown in yellow. It is also slightly above the 25-day and 15-day moving averages while the RSI is slightly above the overbought level of 70. The price seems to be forming a bullish consolidation pattern as some previous buyers start taking profits. In the near term, the price is likely to continue rising as bulls aim for the next resistance at 1.1950.
The USD/CHF pair has been in a steep downward trend as shown in the four-hour chart below. Since September, the pair has dropped from a high of 0.9295 to today’s low of 0.8982. On the four-hour chart, the price is below the previous double bottom level at 0.9030. It is also below the 50-day and 25-day exponential moving averages while the Relative Strength Index (RSI) has moved to the oversold level of 30. Therefore, the pair is likely to continue falling, with the next support being at 0.8950.
The FTSE 100 index rose to an intraday high of £5,985, which is the highest it has been since August this year. On the four-hour chart, the price is above the short and medium-term moving averages. It is also slightly below the previous resistance level at £6,030. Also, the signal and main lines of the MACD are above the neutral level. Therefore, the price is likely to continue rallying as bulls aim for the resistance at £6,030.