DAX & Nikkei indices eye breakouts

MARKETS

The dollar built on a late rally Tuesday through Wednesday, sending EUR/USD back to a 1.18 handle, having touched 1.20. The dollar-strength came in the face of weak US economic data. There was a big miss in ADP payrolls at 428k when 950k in private US job creation was expected. The strength comes on the back of four consecutive months of weakness in the greenback. The Aussie dollar was a notable FX underperformer after GDP data confirmed Australia entered a technical recession in Q2 for the first time in 28 years.

European and Asian stock markets came to life on Wednesday. Germany’s DAX index rose back up towards its July peak, helped by the slide in the euro and the benefit to earnings it offers German exporters. Japan’s Nikkei (see chart) challenged a 3-month old price ceiling, presumably buoyed by the disclosure of Warren Buffet’s $6 billion bet on five Japanese equities.

The price of oil saw one of its biggest daily slides since June after an unexpectedly big draw in US oil inventories as reported by the EIA. The drawdown was bullish but it was the accompanying news that many US refineries will halt production early because of sluggish summer demand that sent prices lower. The refineries will typically shutdown in the autumn after the US summer driving season, but not this year with the impact of the coronavirus on American’s driving plans. The continued dollar strength saw gold and silver turn lower.
 

GURU WISDOM

“Get rich fast and get poor fast are opposing sides of the same coin.”
― Daniel Crosby
 

Michael Jordan & DraftKings

Basketball legend Michael Jordan has taken an equity stake in sports betting company DraftKings in exchange for being a special advisor to the board. It’s unclear what specific duties Jordan will perform but having his huge personal brand onboard is enough. Live sport is almost a write-off this year because of the pandemic but in the years to come, the peeling back of strict US sports betting laws is a game-changer with many potential beneficiaries, of which DraftKings could be one. The company’s shares rose double digits after the news.