CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Sentiment Improves On Talk Of Reopening US Economy Chinese GDP Shrugged Off

Article By: ,  Senior Market Analyst
April 17, 2020 4:02 AM

European markets are set to jump on the open, as positive sentiment spills over from Asia. Talk from Trump of the reopening of the US economy, plus reports of a potential treatment for Covid-19 is boosting risk sentiment and overshadowing data showing that China experienced its deepest contraction on record in Q1.


Data overnight showed the impact of the coronavirus lock down on the world’s second largest economy. China’s economy contracted at a worse than expected -6.8% in the first three months of the year. Data also showed that retail sales continued to stall, however industrial production only dipped slightly suggesting the recovery in the sector is underway.

Under any normal circumstances these figures would send the market tumbling. However, these are clearly usual times. Traders are instead reacting to Trump’s talk of rolling back restrictions on business, joining a handful of other governments across the globe that are looking to gradually reopen their economies after the crippling lock down.

There is clearly a gulf between market expectations and the current underlying economic reality. However, markets are focused on what comes next rather than the here and now which goes some way to explaining why the market is rallying hours after China records an -6.8% decline in GDP.
Treatment and Vaccines
At this stage, attention is naturally turning to vaccinations and treatments for Covid-19. Reports that a Gilead drug is producing encouraging results in clinical trials is also giving risk sentiment a lift. Any successful treatment drug would essentially mean that economies can reopen more quickly, good news for a rebound. Without this, any recovery is expected to be more drawn out – more like a Nike tick, rather than V or U formation. 

Levels to watch
The Dax has jumped over 1% on the open. It remains above it ascending trend line in a bullish chart, after briefly dipping below earlier in the week.
Immediate resistance can be seen at 10830 (high 14th April) prior to 11040 (high 10th March) and 11530 (high 8th March)
Support can be seen at 10520 (trend line support) prior to 10150 and 9335.

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024