Fundamental analytics

RESULTS OF THE WEEK

Uncertainty grows on the market due to rising tensions between the US and China and the spread of the COVID-19 pandemic

 

1. The conflict between the US and China

2. Rising oil prices

3. Hopes for a vaccine against COVID-19

 

The panic of March-April on the financial markets gave way to a period of expectations. Investors are closely following the development of the economic, epidemiological and geopolitical situation in the world and behave rather passively on the market. Exacerbated in recent weeks, the conflict between the US and China reinforces the general uncertainty on the market, forcing investors to again give preference to traditional defensive assets.

Currency market

The foreign exchange market showed multidirectional trading. The main driver here is the American dollar.

In the first half of the week, the American currency was under pressure. Investors were optimistic about reports of successful trials of the COVID-19 vaccine and abandoned the dollar. Trading from Monday to Wednesday, the dollar index completed a fairly tangible decline.

In the second half of the week the situation changed dramatically. The dollar was able to win back most of the previously lost ground amid a worsening relationship between the US and China. The United States approved a bill forcing Chinese companies that list their shares on US exchanges to submit financial statements to local regulatory authorities for audit. An even greater confrontation between the countries caused the Chinese national security bill in Hong Kong. The White House and the Senate severely criticized the bill and threatened China with sanctions.

As a result, the G7 currencies completed trading day with slight deviations from the opening levels of the trading week. EUR / USD was able to complete trading in the green zone. Support for the European currency was provided by news of negotiations on the creation of a single fund to support the EU economy.

GBP / USD, after a slight correction, resumed its downward movement. The pound continues to be pressured by the difficult economic and epidemiological situation in the country, the uncertainty of the Brexit negotiations and the signals of the Bank of England about the possible establishment of negative interest rates.

Precious metals market.

Gold has once again updated a multi-year high. On Monday, the price exceeded $ 1,760. However buyers could not keep the price in this range6 but the metal completed the trading week in the green zone. However, the demand for precious metals and other protective assets remains stable, so gold retains good growth prospects.

Oil market

The oil market closed trading with good growth, but on Friday the bulls lost a significant part of their previous positions amid China's announcement that it would not set a target for GDP growth due to the uncertainty surrounding the pandemic. The main driver of growth for weeks was the data of industry statistics from the United States, which showed that the measures taken by OPEC + and the USA to reduce production are yielding results.

Stock market

Stock indices showed very mixed trading amid growing geopolitical and economic uncertainty. Asian indices at the end of the week were pressured by news from China. American and European indices mainly completed trading in the green zone.

 

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