Here’s what you need to know on Tuesday, May 19:
That market sentiment remains optimistic after a risk rally Mondayfueled by hopes of a vaccine, a Franco-German fund plan, a surge in Chinese oil consumption and the Fed’s commitment to supporting the economy. Gold fell after shooting to its highest since 2012. Rising tensions between the US and China and testimony from Jerome Powell, President of the Federal Reserve, are watching.
Vaccine? Moderna, a Massachusetts-based pharmaceutical company, said its immunization candidate for COVID-19 showed promising results when the eight people who participated in the experiment produced antibodies. While this was only the first phase, hopes for a vaccine sent stock gather. A broad test begins in July.
EU breakthrough: German Chancellor Angele Merkel and French President Emmanuel Macron announced an agreement on a EUR 500 billion fund to strengthen the economy of the old continent. The money comes through the EU budget and will include issuing bonds from the European Commission – mutual debt yet through regular channels. The statement sent Italian interest rates lower and the single currency higher.
Some countries wanted the largest amount, but the step towards mutual debt is a breakthrough. It still needs to be approved by other countries, but Merkel’s nod is a leap forward.
German ZEW economic mood for May is set to show a marginal increase from April’s 25.2 points. Business confidence is crucial to a comeback.
Chinese V shape? Investors also cheered with news that Chinese oil consumption has almost completely recovered from pre-crisis levels – 13 million barrels a year. Day compared to 13.7 mbpd in December 2019. While some suspect Beijing’s numbers, and this is also due to higher use of private vehicles, the black gold has prolonged its rapid progress.
More: S&P 500: Triple triumph thanks to Moderna, potential Chinese V-shaped recovery, softer US tone on China
Sino-American tensions: The deterioration of relations between the world’s largest economies continuously dominates the headlines. Both countries continue to co-fund World Health Organization funding, Huawei’s operations and coronavirus. However, White House economic adviser Kevin Hassett said Beijing is adhering to the trade agreement, a silver lining. China buzzed against the United States after the latter suffered 90,000 coronavirus deaths.
Central Bank Obligation: The Federal Reserve released President Powell’s comments on testimony later today. He promised to add stimulus as much as needed and promised to keep interest rates low until America returns to full employment. His more positive attitude has also contributed to the optimal market mood.
Tax Stimulation? Powell will testify alongside Treasury Secretary Steven Mnuchin, who expressed hope for a strong rejection in the second half of his prepared remarks. Democrats’ new $ 3 trillion financial packages have been described by Republicans as “dead on arrival,” but another form of federal relief is likely.
Powell and Mnuchin begins to testify at. 14:00 GMT and their answers to the senators’ questions may move the markets. Investors will want to see comments on negative interest rates and additional public funds.
See Powell and Mnuchin in Congress: Praising Programs and Promising More
Trump said he is taking hydroxycholoriquin, a remedy for malaria that has been shown to have the potential for serious side effects. Chinese critics called it “witchcraft.”
UK: GBP / USD has also recovered, with the pound withdrawing from pre-filled Brexit talks and also the growing chances of negative interest rates. Silvana Tenreyro, an external member of the Bank of England’s monetary policy committee, said the policy has been a success in the euro area.
UK Work Report is set to show a leap in the change of claim counter in April, reflecting the impact of a full month of closure. The unemployment rate and wage figures are for March, and investors are likely to reject them.
See Preview for UK Jobs: Requirements reassured by the furlough scheme? Success can send sterling higher
The Australian Dollar has kept up and consolidated its gains in the risk ratio despite mounting tensions with China. Beijing dropped an 80% tariff on Australian barley. NZD / USD is in a similar position after New Zealand Reserve Bank officials said the Kiwi exchange rate supports exports.
Cryptocurrencies are corrected lower and Bitcoin withdrew toward $ 9,500.
More: Political Economy in the Age of Trump – A Conversation Between Barbara Rockefeller and Joseph Trevisani