On Tuesday evening, many markets, stock index futures contracts, gold or silver markets were bumped, which seemed to be a consequence of Donald Trump's tweeting on a bill to introduce a new fiscal stimulus package.
On the same day, but even before the President of the United States, the Chairman of the Federal Reserve, Jerome Powell, said that a greater fiscal stimulus is better than no fiscal stimulus. He emphasized that everything is in the hands of American politicians, and moments later Trump's tweet appeared. I instructed my representatives to stop negotiating until the elections when immediately after my victory we will vote on a large stimulus package law that focuses on hard-working Americans and small businesses, wrote the US President.
Stock market indices dived along with precious metal prices, which were accompanied by a stronger US dollar. The correction was strong, but short-lived because Trump came out with his own initiative, which would take effect earlier. The U.S. President, a few hours after the negotiations were canceled, outlined a number of stimulus measures he would be willing to sign if they were separated from a larger law and voted on separately. Trump meant $25 billion for airline payroll support and $135 billion for a payroll protection program for small businesses and $1,200 each for Americans in the form of cheques.
The markets responded to this information, which seems to end the earlier sharp falls. Thus, it is possible that corrections on American indices or silver have ended the so-called shake out, i.e. shaking off some investors from the market, and their sale of assets in a hurry and in large quantities was used by other investors, placing large baskets of shares, futures or commodities.
So if the bottoms caused by Donald Trump's first tweet are not broken soon, it seems that the correction in many markets may have come to an end and they may return to the previous trends.
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.
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