Global stocks soar on optimism of fiscal and monetary stimulus
Global stocks rallied as investors remained optimistic about the fiscal and monetary policies that have been announced recently. In Europe, the DAX, CAC, and Stoxx rose by more than 5% while in the US, futures tied to the Dow and Nasdaq indices rose by more than 4%. If gains hold, it will be the second day in a row, at a time when gains are rare. Investors have been optimistic after China recorded no new locally transmitted infections yesterday. They have also been optimistic about actions by regulators and politicians. Just yesterday, US senate Republicans unveiled a $1 trillion rescue package that will provide relief to taxpayers and businesses. Later today, the Fed will begin buying securities, which will help to reduce the cost of borrowing. The Fed will buy $75 billion worth of treasuries and $32 billion worth of mortgages.
The price of crude oil rose for the second consecutive day as traders hoped that Trump will intervene to stabilize the markets. West Texas Intermediate (WTI) rose by 6.20% while Brent rose by more than 5% to $27.50 and $30.00 respectively. This happened as Trump said that he was considering talking to the Saudis. The US has a lot of leverage because of the military protection it provides to Saudi Arabia. At the same time, Trump has always been in favour of low oil prices because he believes they provide support to the American economy. In reality, America benefits when oil prices are stable because it is a major producer and exporter. If oil prices remain at the current lows it could force many US oil producers into bankruptcy.
The price of Bitcoin rallied by about 16% after violent selling in the past two weeks. As with gold, the price of BTC has been affected by the current volatility in the market. This is partly because many BTC holders were forced to sell their holdings to fill margin calls. Another reason was that there was low demand from institutional investors, who have seen most of their stock holdings suffer. Other cryptocurrencies like Ethereum and XRP rose by 17.5% and 12% respectively.
The EUR/USD pair wobbled today as the US dollar pared back some of its earlier gains. The pair is trading at 1.0722, which is slightly below the day’s high of 1.0830. The price is also slightly above yesterday’s low of 1.0650. The average true range indicator has continued to rise while the Triple Exponential Average (TRIX) has continued to decline. The price is between the middle and lower line of the Bollinger Bands. The pair may continue moving lower during the American session.
The XBR/USD pair rose to an intraday high of 32.42, which is the highest it has been since March 16. It is now trading at 30.81, which is slightly above the important resistance line shown in pink below. The short and medium-term moving averages have started reversing while the price is slightly below the 38.2% Fibonacci Retracement level. The pair may continue rising as traders wait for a statement from Trump on crude oil.
The BTC/USD pair rose to an intraday high of 6906.10, which was the highest level since March, 12. The price is between the 50% and 38.2% Fibonacci Retracement level on the eight-hour chart. The William’s Percentage Range has moved to the overbought level while the Triple Exponential Average (TRIX) has started to rise. The pair may continue moving higher as optimism returns in the sector.