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Research Market strategy
by Swissquote Analysts
Daily Market Brief

Wall Street Fails to Recover, Oil Prices Continue Bearish Trend

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Wall Street Fails to Recover, Oil Prices Continue Bearish Trend

By Strategy Desk

US equities will likely end the week lower despite Wednesday rebound, as tech stocks haven’t extended their recovery. Wall Street tumbled again on Thursday, though at a moderate pace compared to the latest slump. The three benchmark indexes started the session off positively but they gave up by the end of the day.

Investors’ sentiment was damaged by an increase in US jobless claims, which reminds of slow economic recovery.

Nasdaq was the worst performer of the three, losing 1.99%. Elsewhere, the S&P 500 and Dow Jones fell 1.77% and 1.45%, respectively.

Tech stocks failed to lead a rally extension, with Apple, Facebook, Alphabet, Amazon, and Microsoft all turning red.

The energy sector has also dragged the market down, as oil price continued to slip amid worries of increasing crude supply. In rest, all 11 main sectors of the S&P 500 index ended lower.

The US Labor Department said that the number of US citizens applying for initial unemployment benefits rose 884,000 last week, while economists expected 846,000 new applications. They believe the labor market might take years to recover to the pre-COVID levels.

Bears also made reference to the coronavirus stimulus plan proposed by Republicans, which failed to get the needed votes on Thursday. The US Senate killed the bill, which would have offered $300 billion in new aid. Democrats voted against it as they are proposing much more funding to fight the crisis.

Asian stocks are mixed during the last session of the week.

At the time of writing, China’s Shanghai Composite is down 0.21%, though the Shenzhen Component is up 0.09%. Tensions between China and the US cannot find their bottom. US President Donald Trump refused to extend the deadline for China’s ByteDance Ltd to sell TikTok’s US operations. Previously, Trump encouraged either the ban of the popular app on the American market or its sale to a US company. On the positive side, China and India have settled their tensions as the two countries signed their first official agreement since June. Recently, China and India had disputes over their border.

Hong Kong’s Hang Seng Index has edged up 0.55%. The government’s further easing of social distancing rules, announced on Monday, come into effect today. Hong Kong’s public services should fully return from early next week.

Japan’s Nikkei 225 is up 0.58%, while South Korea’s KOSPI is down 0.59%. Korea reported a slight increase in the number of daily coronavirus cases.

Australia’s ASX 200 has declined by 0.64%.

In individual corporate news, Oracle stock price increased by 6% in after-hours trading after the software maker reported Q1 earnings and revenue that beat analysts’ forecasts.

In the commodity market, oil extended losses as investors are worried about the unexpected increase in the US crude supply and ongoing weak demand caused by the lockdown measures.

WTI is down 0.08%, and Brent has declined by 0.27% to $37.25 and $39.92, respectively.

The Energy Information Administration (EIA) said that crude inventories in the US increased by 2 million barrels last week, while analysts expected a decline by 1.3 million barrels. Thus, crude production is gradually returning to normal after sites were closed due to storms in the Gulf of Mexico.

Gold tumbled after reaching nine-day high. The metal dropped despite the selloff in US equities and the greenback. The price of gold futures fell 0.70% to 1,950.70 per ounce. It has been moving sideways since the beginning of August, but maintains the bullish stance on larger timeframes, as demand for safe-havens persists.

In FX, the US dollar gave up initial gains that came before the European Central Bank meeting, as investors speculated that the central bank would signal the need for a lower euro. However, the ECB comments haven’t proven to be that relevant. The bank left the policy unchanged and just said that it would “carefully monitor” the rise in euro. Thus, EUR/USD is up 0.20% to 1.1837, while the USD index is down 0.06%.

The pound is down against the euro and up against the greenback. The British currency has been bearish for days amid the Brexit talks saga, as the UK intends to override parts of the current treaty with the EU.

 
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