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Tencent Record High & US/China trade “intact” - DAILY MARKET UPDATE

Chart of the Day: WTI Crude Oil (6-months)
Source: GKFX / MT4 (June 23, 2020)

•    Tencent, Facebook, Netflix shares touch record high
•    Navarro raises then lowers US / China trade fears 
•    Gold reaches highest since 2012
•    WTI crude oil: turns lower (after filling March gap)


Stock markets charged higher on Tuesday, brushing off a shaky start to the week. Tech shares led the way with Tencent, Facebook and Netflix all reaching all-time highs. European indices gained ground after better-than-expected PMI data for June offset concerns of rising coronavirus cases in Germany that prompted one region to reintroduce lockdown measures.

Forex markets were again very dollar-centric. Cross currency pairs such as EUR/GBP have seen little movement since the tail-end of last week. The Australian dollar held above the ‘bullish outside day’ lows from yesterday despite the bearish news vis-à-vis the risk to the US-China trade pact. The British pound was soft despite a big relaxation of social distancing rules and the reopening of large parts of the UK tourism and hospitality industry beginning July 4th. 

Gold reached its highest since 2012 as a breakout from $1750 per oz. gained traction. NOTE: We highlighted the possibility of gold benefitting from a dovish FOMC meeting in ‘The Week Ahead video (June 8)’. WTI crude oil dropped after filling the gap made in March


Win or lose, everybody gets what they want from the market. Some people seem to like to lose, so they win by losing money. – Ed Seykota

US / China trade

Traders look emboldened after surviving a brief sell-off on Monday that ultimately ended in most global indices heading higher. White House trade adviser Peter Navarro implied late Monday that the US-China trade deal was “over” but walked back the comments hours later. He was later backed up by US President Trump who called the deal “intact”. 

The Navarro episode gave an unexpected example of how important the phase one trade deal is for both markets and for the Trump administration. We might conclude that whatever threats might come from the US, the deal is stable and downside risks to markets via US / China trade look negligible.

Coming Up…

On the economic calendar for Wednesday we have the RBNZ rate decision, German IFO, SNB Quarterly bulletin, EIA crude oil inventories and the Fed’s Evans and Bullard giving speeches.

WTI crude has filled the large weekend gap* made between March 6-9 that set the course for heavy declines afterwards. 

*Filling the gap is popular day-trading strategy that normally plays a lesser role in longer term price action. In the strategy traders will buy a stock after it gaps down and and sell out either when the gap fills or when the day closes. 


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