Archives of “April 2020” month

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European shares end with solid gains as risk on sentiment increases

  
Analysis, Global Indices
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Hopes f him him him rom Gilead news propel European shares higher.

European indices are ending the session with solid gains on hopes from the Gilead remdesivir drug,
  • German DAX, +3.0%
  • France’s CAC, +2.32%
  • UK’s FTSE 100, +2.77%
  • Spain’s Ibex, +3.24%
In the European 10 year note sector are mostly lower with the exception of Italy (their credit rating was lowered by Fitch after the close yesterday)
Hopes f him him him _rom Gilead news propel European shares higher.

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Seeing some dollar selling as hopes for a vaccine improve

  
  Analysis

Stocks higher and hopes are higher after Gilead remdesivir drug trials

The news that Gilead’s remdesivir 2 clinical trials showed that an open-label Phase 3 trial testing the therapy in severely ill patients, found that those taking a 5-day or 10-day course of treatment led to similar results. The study showed that:

  •  52% of participants taking either dosing regimen were discharged from the hospital after 14 days of treatment,
  • At least 53% of those patients were reported as reaching “clinical recovery.

Gilead chief medical officer Merdad Parsey said in a statement. “The study demonstrates the potential for some patients to be treated with a 5-day regimen, which could significantly expand the number of patients who could be treated with our current supply of remdesivir.”

Gilead also said that a government-run clinical trial evaluating remdesivir in severely ill COVID-19 patients met the study’s primary endpoint. That study is being conducted by the National Institute of Allergy and Infectious Diseases,

The news has sent the dollar lower as flows out of the safe haven currency is the initial reaction.
The EURUSD has moved from 1.0838 to a high of 1.0866.  The pairs 100 bar MA on the 4-hour chart is at 1.08684. A move back above that level would be more bullish. The 200 hour MA at 1.08336 is a risk level for longs.
The GBPUSD was testing its 100 and 200 hour MAs at 1.2398 area but has since moved away from those MAs and trades at 1.24309 currently.  The 50% midpoint of the move down from the April 14 high comes in at 1.24466. The price has been above and below that level in trading both yesterday and today. Moving back above it would be more positive/bullish.
The USDCAD is trading to a new session low of 1.3917 (currently at 1.3932). A swing area going back to April 9 through April 15 comes in at 1.3920 to 1.3930.  Although the price dipped below that level, downside momentum could not be continued. A move below that level will be needed to solicit more selling toward the April 13 low at 1.38548.

Germany forecasts worst recession since at least 1950

  
Analysis, Economy
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The German government expects the fallout from the virus outbreak to send the economy into its worst recession since the aftermath of WWII

Germany
  • Forecasts GDP to fall by 6.3% in 2020
  • Forecasts GDP to grow by 5.2% in 2021
The above is the latest projections by the economy ministry, and that shouldn’t come as much of a surprise given the economic hit across the globe – not just in Germany.
This hinges on some kind of U-shaped or V-shaped recovery but the issue is we’re not even going to be sure how the next quarter is going to look like.
The focus right now is on easing restrictions but what happens if there is a secondary outbreak or the infection rate starts rising again? The latest report from Germany is that the virus’ reproduction rate is back up to 0.96 from 0.70 as of Monday.
If that goes back above 1.00, will the government impose another round of restrictions? What happens if this continues all the way into Q3 or even Q4?
It is very much play by ear at this point and the same applies to every country in the world.

Gilead trial for Covid-19 meets primary endpoint

  
  Analysis
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Push stocks higher

  • Gilead Remdesivir trial for Covid-19 has met primary endpoint
  • Study to provide info on 5-day duration of therapy
  • will share added Remdesivir data from phase 3 shortly
  • Seees data from 2nd simple study at the end of May

US advanced GDP for 1Q -4.8% versus -4.0% estimate

  
Analysis, Economy
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US GDP for 1Q 2020

The US advanced GDP data for the 1Q came in at +4.8% initially but the headlines were then corrected to read -4.8% vs -4.0% estimate.
  • Personal consumption fell -7.6% vs -3.6% estimate
  • Core PCE rose 1.8% vs 1.7% estimate
  • GDP price index rose 1.3% vs 1.0% estimate
The data signals the start of the recession.  The worst is yet to come as GDP is expected to plunge in the 2Q
US GDP

USD/JPY tests next key support as dollar remains weak

  
Analysis, Forex

USD/JPY runs into the 50.0 retracement level of the recent swing move higher back in March

USD/JPY D1 29-04

That level sits at 106.45 and will be a key daily support to watch before a potential drop back towards 105.00 next in the pair. The shove lower comes as the dollar is continuing to stay weaker across the board in European morning trade.
Despite some recovery in the dollar late yesterday, the fact that USD/JPY failed to reclaim 107.00 continues to give sellers the advantage from a technical perspective.
And so far, sellers are continuing to keep up the momentum in trading today.
The mood in equities is still more or less the same with European stocks holding mild gains with US futures up by around 0.7% currently. Meanwhile, the bond market is telling a different story with US 10-year yields down by about 2 bps to 0.593%.
For now, the daily support at 106.45 will be key for USD/JPY sentiment. A firm run below that will see little in the way of stopping a move back towards 105.00 potentially.
The risk for sellers is if buyers start to chase a move back above 107.00.
Looking ahead, the Fed will be the key risk event to watch today so let’s see if there will be more market clarity once that is over and done with.
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