Asia Morning: U.S. Stocks Keep Rallying, Gold Conquers $2,000 Level

Congressional talks on virus relief bill were in "the right direction", encouraging investors...

Trading floor 2

On Tuesday, U.S. stocks kept rallying. The Dow Jones Industrial Average advanced 164 points (+0.62%) to 26828, the S&P 500 rose 11 points (+0.36%) to 3306, and the Nasdaq 100 charged 41 points higher (+0.38%) to another record close of 11096.


S&P 500 Index: Daily Chart


Source: GAIN Capital, TradingView


Investors were pleased to hear Senate Minority Leader Chuck Schumer (Democrat) saying that negotiations between Democrats and Republicans on new coronavirus relief measures were in the right direction.

Energy (+2.45%), Food & Staples Retailing (+2.19%) and Semiconductors & Semiconductor Equipment (+2.03%) sectors performed the best. Mosaic Co (MOS +13.52%), Advanced Micro Devices (AMD +9.49%) and Williams (WMB +8.22%) were top gainers.

Regarding U.S. economic data, Factory Orders gained 6.2% on month in June (+5.0% expected) and Durable Goods Orders increased 7.6% in June (+7.3% expected).     

Due later today are reports on ADP Jobs Report (+1.200 million private jobs in July expected), Trade Balance (trade deficit of 50.2 billion dollars in June expected), Markit U.S. Services PMI (July final reading 49.6 expected) and ISM Services Index (49.6 for July expected).

European stocks were mixed, with the Stoxx Europe 600 Index closing broadly flat. Germany's DAX 30 declined 0.36%, while France's CAC 40 added 0.28%, and the U.K.'s FTSE 100 was little changed.

U.S. government bond prices rose, as the benchmark 10-year Treasury yield slid to 0.520% from 0.558% Monday.

Spot gold price eventually took out the psychologically-significant level of $2,000 an ounce closing $42.00 higher (+2.1%) at $2.019 an ounce. Bank of America said it now expects the yellow metal to reach $3,000 an ounce over the next 18 months. Meanwhile, spot silver price surged 6.9% to $26.00 an ounce.

U.S. WTI crude oil futures (September) advanced 1.7% to $41.70 a barrel.

On the forex front, the U.S. dollar saw its rally lose steam, as the ICE U.S. Dollar Index dropped 0.3% to 93.26.

EUR/USD rebounded 0.3% to 1.1802, halting a two-session decline. Official data on the Eurozone's Retail Sales will be reported later today (+6.1% on month in June expected).

GBP/USD was little changed at 1.3071.

Later today, July Markit Services PMI (final reading) for the Eurozone (55.1 expected), Germany (56.7 expected), France (57.8 expected), the U.K. (56.6 expected) and the U.S. (49.6 expected) will be released.

USD/JPY failed to hold onto the 106.00 level closing at 105.71.

AUD/USD climbed 0.5% to 0.7160. While the Reserve Bank of Australia kept its key interest rate unchanged at 0.25% (as expected), RBA Governor Philip Lowe said: "As difficult as this is, the downturn is not as severe as earlier expected and a recovery is now underway in most of Australia."


More from Commodities

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.