Anti-COVID-19 stocks are sold off, European struggle against epidemic continues

Market Recap 8/19

Global equity market:

(Source: KVB PRIME)

The US stock market continued to strengthen despite a continuous weakness in basic production, closing up by 0.23% at 3,389.78. The Dow Jones - with the highest industrial component - fell 0.24% to 27778.07, and the NASDAQ index continued to recover its losses as it closed up by 0.98% at 11399.03. Technology stocks, chip stocks, and gold stocks also continued to rise.

European equity markets are relatively weak; the German DAX index closed down by 0.3% at 12881.76 and the UK FTSE 100 index closed down by 0.83% at 6076.62.

The Chinese stock market was relatively flat as a whole but kept rising - the Shanghai Composite Index rose 0.36%, the Shenzhen Component Index rose 0.19% and the ChiNext Index rose 0.17%. The recent upward trend within the financial sector has slowed down significantly.

Precious metal forward contracts

Yesterday, the market continued to chase ‘gold’ –the metal began to surpass 2000 in the European market. After that, the US session saw it briefly stand above 2015 and then it began to fall.

As of closing, gold rose by 3.36% to $1999.92 per ounce, and it continued to consolidate during the Asian trading hours this morning.

Crude oil forward contracts

OPEC has recently continued callsfor production cuts alongside retrospective production cuts to compensate, and crude oil prices have remained stable overall.

WTI crude oil rose for a short period of time during the US session and then fell back in the late trading hours.

WTI crude oil fell 0.19% to $42.70 per barrel by closing time, while Brent crude oil rose 0.18% to $45.37 per barrel.

Currency forward contracts

·        USDX down to 92.22 (-0.05%)

·        EUR/USD up to 1.19287 (0.498%)

·        GBP/USD up to 1.32382 (1.039%)

·        AUD/USD up to 0.72396(0.381%)

·        NZD/USD up to 0.66009 (0.705%)

·        USD/CAD down to 1.31637 (-0.410%)

·        USD/JPY down to 105.366 (-0.583%)

Global Fundamentals

COVID-19

The US Centers for Disease Control (CDC) noted that, as of yesterday, 40,117 new confirmed cases of the coronavirus have been reported across the country. The cumulative number of cases reached 5,422,242, rising fromthe figure of 5,382,125 recorded on 17th August.

In Europe, meanwhile, the overall COVID-19 pandemicis still not under control: Dutch Prime Minister MarkRuttenoted that theCOVID-19 recovery has not progressed wellin the Netherlands, while Irish PM Micheál Martin also admitted the recent development trend of the virus is being treated very seriously.

Trond Grande, Deputy Chief Executive Officer of the Norwegian Sovereign Wealth Fund, also said the coronavirus has not been controlled by any observable standard.

United States

A number of anti-epidemic concept stocks have been sold in the US: Novavax Pharmaceuticals fell 5.1%, Vaxart fell 3.6%, Moderna fell 2.7 and BioNTech fell 1%.

US Treasury Secretary Steven Mnuchin said that five states have been allowedto implement President Trump's unemployment executive order, and it is expected that all states will be allowed to implement it in the near future.

OneUS state, lowa,was also hit by the DERECHO storm and the Secretary of State for Agriculture said that millions of acres of corn across the state would not be harvested.

Europe

France officially announced amandatory face mask order for offices, which should be put into action on 1^stSeptember. At the same time, the country’s Employment Department still recommends working from home.

German Chancellor Angela Merkel made a speech yesterdaystressing the importance of current movement restrictions and stated that the current economy, education and children’s wellbeing will be the focus of the fight against the epidemic. It is reported that Germany will not relax its currentrestrictions until the end of the third quarter.

European Central Bank (ECB) Vice President Luis de Guindos said that Eurozone countries should maintain their loan guarantee schemes. At the same time, the scope of the ECB’s loansfor banks increased by 50 million euros to 1.6 trillion euros.

Crude oil

API released a report last night stating that US crude oil inventories fell by 4.264 million barrels to 512 million barrels last week. The data also showed that US crude oil imports increased by 139,000 barrels per day last week.

The draft OPEC report shows that the cartel’stechnical committee has considered the possibility of COVID-19 worsening, causing demand to face major downside risks.

OPEC and its technical committee predict that the implementation rate of production cuts in July will reach 95% - including Mexico, which will reach approximately 97%. The technical team will hold the next remote meeting on 16^thSeptember.

The expert group called for vigilance and supervision of the implementation of compensation measures for overproduction.

Today's currency forecast

EUR/USD

Although the Euro rose as we predicted, it did not appear to pull back and then riseas forecasted, which increases the risk of our currently strategy (namely, to continue to chase EUR).

If the price does not show a stable correction intraday, it is not recommended that you participate long trading with the Euro. The shared currency has already regained the drop of 61.8% that happened at the end of 2017, and it is still possible to hold long EUR positions in the medium term.

In terms of intraday layout, the consolidation that did not appear yesterday will most likely appear today and the target is around 1.897.

[EUR/USD, monthly chart] (Source: KVB PRIME)

[EUR/USD, four-hour chart] (Source: KVB PRIME)

GBP/USD

Similar tothe Euro, if you follow the bullish layout reported yesterday, there will be a profit margin of nearly 100 pips with the pound today. If you wait patiently for a callback, you don’t have to feel sorry for missing out.

After that, you will still use short and long trades as the main idea. The contrast here with the Euro is that even if both EUR and GBP have resumed their long-term declines, the pound has not been able to firmly support prices in the long term.

Based on the fundamentals, the price will not be supported today - in daily terms, the price needs to pull back to around 1.139. Today's profit margin is sufficient, but risk control is still required before participation is recommended.

[GBP/USD, four-hour chart] (Source: KVB PRIME)

USD/JPY

The overall trend of the dollarwas unusually weak yesterday. Although the US and Japanese currencies continued to fall as we expected, they did not return to the ideal 106 test position. Today’s analysis focuses on finishing callbacks.

The first target is around 105.85, which can be tested back to 106. Note that due to the contrarian pullback, traders’ risk control needs to be even more rigorous today.

[USD/JPY, four-hour chart] (Source: KVB PRIME)

Gold

With the recognition of Buffett's holding of Barrick's stocks, yesterday's gold ETF position report showed that medium-sized capital began to enter the gold market, even if in the countries with big gold demand(such as India) their current demand for gold is largely falling.

The price not only confirmedour forecast of returning to the weekly moving average of $20, but also further directly broke the position. There is a maximum of $70 intraday.

This wave of gold’s current forecast is a prelude to the standard ‘two-stage fall’ – as such,it is not recommended to chase long trading profits today.

[XAU/USD, four-hour chart] (Source: KVB PRIME)#90USDBonus#