Europe To Power Higher Despite Cooling US-China Relations
Fiona Cincotta May 28, 2020 7:20 AM
European bourses are looking to extend gains for a third straight session
European bourses are looking to extend gains for a third straight session on Thursday as optimism over the reopening of economies once again overshadows rising tensions between the US and China over Hong Kong.
The European Commission’s announced rescue fund is also going some way to boost sentiment on the continent. The fund will include €500 billion raised on the bond market. Given the size of the crisis that is hitting the region, the sums involved are small. However. it is the move towards financial integration that is being cheered by investors. This marks a clear turning point in policy.
Looking ahead, US data releases will be in focus, with Q1 GDP, US Durable goods and jobless claims taking centre stage. The numbers are expected to be dire, with Q1 GDP to confirm -4.8% contraction on annualised basis, and Durable goods to decline by a record -19%. Worryingly initial jobless claims are expected to remain over 2 million. There will also be a growing focus on continuing claims for signs of rehiring as states ease lockdown measures to reopen the economies.
Whilst European futures are charging higher and US futures to a lesser extent, oil markets are extending yesterday’s steep losses. Hopes of a smooth recovery for oil from the coronavirus lockdown were dashed after oil inventories rose by more than expected.
WTI shed 4% in the previous session and is down 3% at the time of writing.
Oil levels to watch
WTI’s rally look s like it is stalling. The stock trades below its 20& 50 sma on 4 hrs chart.
Immediate support can be seen at $31.16 (today’s low) prior to $30 psychological level and $25.80 (low 14th May).
Resistance can be seen as $32.70 (50 sma) and $33.50 (20 sma) prior to $34.70 (high 26th May)
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