13 July 2020

European Stocks End Higher Despite Jump in Covid Cases

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News shaping
the markets today

     

What’s happening: European stocks closed the week on a stronger note despite renewed concerns over a surge in coronavirus cases around the world.

What happened: The US continued to report record daily numbers for covid-19, while fresh outbreaks were also witnessed in other parts of the world.

Sentiment was boosted by stronger-than-expected economic data from Italy and France, while investors looked forward to news of covid-19 treatment, helping stocks end higher on the last trading day of the week.

Why it matters: Coronavirus concerns dominated the markets earlier in the session following news of the US reporting its sixth daily record high of covid-19 infections in ten days, with over 60,000 cases added on Thursday.

Hong Kong also announced the closure of schools, while Australia tightened restrictions in Melbourne after a rise in cases. Tokyo in Japan also reported an increase in covid-19 cases.

Asian equities declined on Friday, with concerns over impediments to the global economic recovery. Chinese stocks also retreated on Friday, halting the CSI 300 index’s eight-session rally.

Amid the gloom, the markets cheered positive economic data from the European Union, with Italy reporting a 42.1% rise in May’s industrial production, while France’s industrial production climbed by 19.6%. Meanwhile, the UK announced the easing of restrictions for gyms, leisure centres, and swimming pools.

Investors also reacted to Gilead Sciences reporting that its covid-19 candidate, Remdesivir, had shown an improvement in recovery rates and a significant decline in the risk of mortality versus standard procedures. Meanwhile, BioNTech also said that its coronavirus vaccine is likely to be ready for an approval by December.

After opening lower on Friday, the Stoxx Europe 600 index gained 0.9% after a three-day decline. The index gained 0.4% for the week. The German DAX 30 index climbed 1.2%, the French CAC 40 added 1% and London’s FTSE 100 index gained 0.8% on Friday.

What to watch: Investors will be assessing how different companies have been holding up amid the coronavirus crisis, with the second-quarter earnings season starting this week. The economic calendar is very light today, with only Germany scheduled to report wholesale prices. Coronavirus cases will continue to grab the headlines, with the total case-count crossing 12.8 million globally.

The Markets Today

     

Crude oil will be in focus today, after recording weekly losses despite gains on Friday.

Context: Oil futures closed higher on Friday, driven by hopes of a covid-19 treatment being available soon. However, crude prices still settled lower for the week as the IEA (International Energy Agency) warned of weaker demand for the commodity due to the pandemic.

Details: Oil prices received a boost on Friday after Gilead Sciences issued positive data around its coronavirus vaccine candidate, Remdesivir. The data showed that the antiviral drug can lower the risk of mortality in covid-19 patients by 62%. The news also provided a boost to the US stock markets.

Meanwhile, the IEA lifted its annual projection for crude demand to 92.1 million bpd (barrels per day), a 400,000 bpd rise from its previous month’s forecast. The agency warned, however, that the resurgence in covid-19 could weaken demand for oil going forward.

The markets also responded to Baker Hughes saying on Friday that the number of active US oil rigs had declined by 4 to 181.

US reported over 63,000 new coronavirus infections on Thursday, marking another daily record, as California and Texas witnessed a massive rise in cases and hospitalisations.

WTI (West Texas Intermediate) crude for August gained 2.4% to end at $40.55 a barrel on the NYMEX (New York Mercantile Exchange) on Friday, following a 3.1% decline the previous day. US crude prices were down 0.3% for the week.

September Brent oil rose 2.1% to settle at $43.24 per barrel, after declining 2.2% in the prior session. Global benchmark prices recorded a weekly rise of 1%.

August natural gas gained 1.5% to reach $1.805 per million British thermal units on Friday, rising 4.1% for the week.

What to watch: Traders will be keeping an eye on the OPEC’s Joint Technical Committee meeting, scheduled for Tuesday and the Wednesday’s meeting of the Joint Ministerial Monitoring Committee. Crude is likely to remain under pressure if daily covid-19 cases do not show signs of a decline. WTI crude futures traded down 0.9% to $40.17 per barrel during the Asian session.

Other Markets: US indices trading closed higher on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 up 1.44%, 1.05% and 0.66%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

India's retail price inflation, China’s foreign direct investment as well as the US consumer inflation expectations and government budget.

 

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