Global stocks surge as Coronavirus risks ease
Global stocks rose today as positive momentum returned to the market. Momentum picked up on hopes that the Coronavirus pandemic is under control. The number of deaths and new infections has continued to fall in key countries like Germany, Italy, and Belgium. In the United States, while the number of cases is rising, there are hopes that they will peak this week. Still, analysts warn that it is too early to celebrate victory over the disease because it is not yet known what will happen after people starts to return to work. In Europe, the main indices like the DAX, FTSE 100, and CAC rose by more than 3%.
Another reason why stocks are rising is because of the stimulus. In the United States, the White House and lawmakers have been holding meetings to deliberate on the fourth stimulus package. Donald Trump has supported a new stimulus package that would be worth more than $2 trillion. Unlike the other package, this one would go to rebuilding the country’s infrastructure like roads, hospitals, and rail. Other countries have also implemented their own stimulus packages. For example, Japan’s parliament passed an almost $1 trillion package that will provide relief to companies and families.
The Australian dollar rose after the Reserve Bank of Australia (RBA) delivered its interest rates decision. As was widely expected, the bank left interest rates unchanged at 0.25%. The bank also sounded optimistic about the resurgence of the Australian economy. In the statement Governor Philip Lowe said that he expected the country to see a large contraction in the second quarter and the unemployment rate is expected to rise. Still, he and members of the committee are optimistic that the economy will recover.
Today, we received a number of important economic data from Europe. In the UK, data from Halifax showed that house prices were unchanged in March. They rose by 3.0% on an annualized basis. In Sweden, industrial production declined by 0.3% in March while industrial new orders rose by 5.9%. In Germany, industrial production rose by 0.3% in February. While the February numbers are important, investors are not paying close attention to them because the situation has changed substantially in the past month.
The AUD/USD pair rose to an intraday high of 0.6193, which is just 7 pips below the important psychological level of 0.6200. On the hourly chart, the pair is forming a cup and handle pattern, which means that the pair could rise close to 0.61200. If the pattern holds, it means that the pair could decline slightly to form the handle.
The EUR/USD pair rose to an intraday high of 1.0877, which is the highest it has been since April 3. On the hourly chart, the pair appears to have bottomed after it formed a double bottom pattern. The 28-day and 14-day exponential moving averages have made a bullish crossover while the RSI has been rising. The pair appears set for a rally, which could see it test the important resistance level of 1.0950.
The USD/CHF pair declined slightly, this is partly because of the overall weakness of the US dollar. The pair is trading at 0.9720, which is the lowest level since Friday last week. On the hourly chart, the price is below the 14-day and 28-day exponential moving average. The pair also had found an important resistance at around 0.9795. The pair may continue declining and possibly test the support of 0.9688.