On Tuesday, May 5th, 2020, European stock markets seem to be rising after previous increases in Asia and on Wall Street, where the quarterly financial results are being published. Energy companies have been gaining a lot as oil prices have risen recently and investors seem to be counting on the demand for fuels to improve after the opening of the economies.
Stock futures in the United States are trading at higher levels as a result of optimism about the reopening of economies and rising oil prices. California will open partially on Friday, and the Governor of New York announced that the reopening process will take place in four phases, starting on May 15. California was the first state to decide to close due to the epidemic. Hong Kong will soon ease social distancing measures.
The Australian dollar gained against the US dollar on Tuesday morning. The Australian Reserve Bank (RBA) has not changed interest rates, and the main rate remained at 0.25 percent. The RBA assumes that production will fall by about 10 percent from the first half of 2020 and by about 6 percent during the year. The unemployment rate will reach its highest level of about 10 percent in the coming months, remaining above 7 percent by the end of next year.
Brent oil prices have risen by more than 7%, reaching their highest level since 15 April, with global demand for oil expected to rise after the April lows as countries ease the constraints of the crisis triggered by the epidemic. In addition, Genscape announced a slower increase in oil stocks in Cushing, Oklahoma last week.
The German constitutional court today ruled on the legality of European Central Bank bond purchases. If this ruling is not favourable, the German Bundesbank may not participate in further debt purchases. This would be a serious shock to the market.
Today at 16:00 the ISM report for services in the United States will be published. It seems that this could be the most important publication in the macroeconomic calendar for today. The market consensus assumes that the index fell in April below 37 points from over 52 points earlier.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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