The end of the week seems to bring great sentiment to the stock markets despite a stronger USD in the currency market and the still blocked Suez Canal or restrictions imposed in Europe.
Major stock markets in Europe rebounded on Friday after hitting two-week lows in the previous session as investors seem to be focused on the prospect of a global economic recovery despite uncertainty over rising infection rates and slow vaccine introductions. Meanwhile, the European Council summit continued for a second day, with EU leaders discussing the COVID-19 outbreak situation, the situation in the Eastern Mediterranean and relations with Russia. EU leaders also supported tightening the criteria for allowing the export of EU-produced coronavirus vaccines to ensure the availability of vaccines within the community. However, they failed to reach an agreement on vaccine distribution and some countries' need for additional Pfizer/BioNTech vaccines. The DAX 30 rose 0.8 percent to 14,740, while other major exchanges gained between 0.5 percent and 0.7 percent.
Moreover, the Ifo business climate index for Germany rose to 96.6 in March 2021, the highest level since June 2019 and clearly above market expectations of 93.2. Companies became more optimistic about developments in the coming months (100.4 vs 95.0 in February), while their assessments of the current situation were also better (93.0 vs 90.6). Sentiment among manufacturers improved sharply (11.2 vs. 2.7) as expectations for exports rose sharply due to strong demand from the U.S. and China, while sentiment among service providers also rose sharply (6.5 vs. -2.2). Business confidence among builders also returned to positive territory (2.3 vs -2.8), while that among traders fell (-1.4 vs -14.6), according to the Ifo Institute.
On the FX market this week, we could see a continuation of weakness in the major currencies against the US dollar. EUR/USD fell below the 1.1800 level at some point during the week and was at its lowest since the second week of November. It still seems that the corrective strengthening of the USD may still develop towards 1.16-1.17, where support may appear.
It is also impossible not to mention an interesting phenomenon, which is the divergence on the gold market formed between the price of bullion and the US dollar. Despite the strengthening of the USD, gold does not lose its value and is above USD 1700. It may mean the return of buyers on this market. This assumption might be confirmed in the next few weeks.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
76.44% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
