News

US Stock Futures Tumble on Second Wave Outbreak Fears

Equities

Major US stock-index futures plunged as investors were concerned about the reopening of the economy and fears of a second-wave outbreak. The White House Advisor Dr. Anthony Fauci stated that a vaccine is essential to stop the coronavirus spread, but it will take much time to reach a usable one. Moreover, he expressed his woes over the quick reopen of states and warned that the US could face more "suffering and death". Stock benchmarks fell sharply to the end of the session, and the drop continued during the Asian session, where the Dow Jones Industrial Average futures declined to 23377, the S&P500 futures fell to 2824, and Nasdaq futures dropped to 8997. Indices futures were able to trim losses as we approached the European trading session.

USD

The dollar index, which measures the greenback against a basket of major currencies, eased slightly to 100.01 as investors await fresh hints over negative interest rates. Last week, the Fed Funds futures priced a probability of applying negative interest rates in the United States. On the other hand, President Donald Trump urged the Federal Reserve to adopt negative interest rates, as the US Consumer Price Index fell by 0.8% in April, the biggest drop since the great recession. Market participants are looking for fresh hints from the Federal Reserve Chairman Jerome Powell as he speaks about the current economic issues in a webcast hosted by the Peterson Institute for International Economics. The EURUSD inched higher to $1.0856, and the USDJPY declined to 107.04.

NZD

The New Zealand dollar lost ground against rivals following the RBNZ monetary policy meeting. The Reserve Bank of New Zealand kept interest rates unchanged at 0.25% but expanded its asset purchases program to $60 billion from $33 billion previously. The board expressed its commitment to ease policy further if needed, by either cutting interest rates or expanding the asset purchases. The NZDUSD declined to $0.5999, the EURNZD rallied to 1.8072, and the GBPNZD edged higher to 2.0449.

Gold

Gold prices rose slightly amid increased talks of further stimulus and negative US interest rates. The price of a gold ounce inched higher to $1711, the price of a silver ounce held steady near $15.50, while palladium futures declined to $1817.

Oil

Oil prices settled mixed, as fears of a second round of infections weighed on sentiment. The new coronavirus cases started to pick up again as some countries are reopening their economies quickly, which could force these countries to restore their lockdown measures. These concerns were able to offset the influence of Saudi Arabia's call for further output cuts. On the other hand, the American Petroleum Institute reported a buildup of 7.580 million barrels last week. The official numbers will be published by the US Energy Information Administration later today. Currently, the West Texas Intermediate crude June delivery is trading almost flat near $25.30, while Brent blend July delivery fell to $29.05

Major Economic Events

GMT Country Event Expectation Previous

9:00

EZ

 Industrial Production (MoM) (Mar)

-12.0%

-0.1%

12:30

US

 PPI (MoM) (Apr)

-0.5%

-0.2%

13:00

US

Fed Chair Powell Speaks

-

-

14:30

US

 Crude Oil Inventories

-

4.59

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