FX168 Financial News (Hong Kong) News After the outbreak of the bulls, on Wednesday (June 24) in the Asian market, spot gold rose again to break through the $1770 mark, not far from the 8-year high reached yesterday. With the new crown epidemic hit economic prospects, central banks of various countries have widely implemented monetary stimulus measures. Since this year, the overall price of gold has shown a unilateral rise. In this trading day, the market focuses on the latest economic outlook of the IMF.
Undercurrent surging! The Nasdaq again hit a record high, and the gold price once broke through 1770.
It seems that global stock markets and gold have risen synchronously, but yesterday (June 23) witnessed this scene: the Nasdaq once again set a new historical high on Tuesday, but gold bravely broke through the 1770 mark and refreshed the 8-year high.
On the news level, China-US trade news and PMI economic data became the biggest drivers of the market on Tuesday.
In an interview with Fox News yesterday, the director of the US National Trade Commission, Peter Navarro, said that the trade agreement with China was “ended”, which triggered a wave of risk aversion.
However, Navarro, US National Economic Advisor Kudlow and US President Trump subsequently clarified this. US President Donald Trump tweeted that the trade agreement with China is still intact and hopes that they can continue to implement the agreement. Navarro also stated that the first phase of the trade agreement “is still continuing to be implemented.”
Lee Harman, a foreign exchange analyst at Mitsubishi UFJ Group (MUFG), said: “We expect further influence to be limited, and it is expected that President Trump will continue to work on the first phase of the trade agreement before the election. However, yesterday’s price movement did highlight The foreign exchange market is still very sensitive to the uncertainty of trade policies. This may still be a stimulus factor for greater volatility.”
In terms of data, the initial value of European manufacturing PMI in June was 46.9, higher than the expected 44.5. The initial value of French manufacturing PMI in June rose sharply from 50.6 in May to 52.1, the highest since September 2018, far exceeding the expected 46. Germany’s initial manufacturing PMI rose to 44.6 in June from 36.6 in May, and is expected to be 41.5. The initial value of UK manufacturing PMI in June was 50.1, after 40.7 in May.
At the same time, the initial value of the Markit Manufacturing Purchasing Managers Index (PMI) in the United States in June was 49.6, expected to be 48, and the previous value was 39.8. In June, the initial value of Markit’s service industry PMI in June was 46.7, and it was expected to be 46.5.
UBS currency and macro strategist Vassili Serebriakov said: “The situation in the G10 is that the Eurozone PMI is higher than expected. These economic data are encouraging because the economic growth rebounded slightly faster than market expectations.”
Boosted by the easing of trade tensions and positive data, the European and American stock markets rose on Tuesday, among which the Nasdaq set a record closing high for the fifth time this month.
As of the close, the Dow Jones Industrial Average closed 131.14 points, or 0.5% higher; the S&P 500 index closed 13.43 points, or 0.43% higher; the Nasdaq index closed 74.89 points, or 0.74% higher.
Mark Luschini, chief investment strategist at Janney Montgomery Scott, said, “The economic data we have seen recently has a cumulative effect and is helping to support the V-shaped rebound in the stock market. This reinforces the view that the stock market can continue to rise despite the considerable economy The damage will continue for some time, such as rising unemployment and a slow recovery in the tourism, leisure and entertainment industries.”
Luschini pointed out that despite the rising number of new cases, federal and state officials have no plans to further implement the economic blockade, which may cheer investors.
Against the background of the continued rebound in risk sentiment, the US dollar was hit again on Tuesday. The US dollar index fell below the critical 97 mark and closed down for the second day in a row. The U.S. dollar index on Wednesday’s intraday market was almost flat.
With the fall of the US dollar, the impact of the new crown epidemic on the economic prospects, and the widespread implementation of currency stimulus measures by central banks in various countries, spot gold broke out again. It broke through the key 1770 mark on Tuesday and refreshed the 8-year high. On Wednesday, the city broke the major break. At one time, the price of gold rushed to 1,773 US dollars, once again refreshing the highest level since 2012.
Buckingham, global director of BlackRock’s corporate strategy, said that market trends are driven by the epidemic; interest rates are expected to remain low for a longer period of time.
Edward Meir, an analyst at ED&F Man Capital Markets, said: “The stimulus waves from all over the world not only lead to inflation, but also make the economic outlook weaker and make gold look more attractive.”
Tai Wong, Head of Basic and Precious Metals Derivatives Trading, Bank of Montreal (BMO), said: “Unless the price of gold falls below $1750 in the next few days, it should be only a matter of time before it rises to the high of $1800 reached in October 2012, perhaps a week or even shorter Time can be reached.”
Heavy warning! IMF latest economic forecast released today
Looking at this trading day, the International Monetary Fund will release the new “World Economic Outlook”, which will be announced at 21:00 Beijing time on Wednesday, and the market remains highly vigilant.
IMF President Georgieva said last month that the IMF is “very likely” to lower its already pessimistic forecast that 2020 global GDP will shrink by 3%, but did not disclose details.
Earlier on June 14, Georgieva said that the global economic outlook for 2020 is expected to be further reduced from the contraction forecast of 3% in April.
Georgieva said, “Due to the impact of the epidemic, the real economy has been hit hard. According to the latest data, we may be further revised down. The data shows that most countries perform worse than we expected, and currently only The situation in a few countries has improved, but it is not sufficient to support growth, nor is it sufficient to change the overall direction.”
In addition, IMF chief economist Gita Gopinath also previously published a blog post saying that the IMF may predict that the global economic contraction in 2020 will be more serious than previously expected, and believes that there is “serious uncertainty” in the recovery path. “.
Gopinat said that many countries that have restarted the economy have shown signs of early recovery, but a new round of virus infection and re-implementation of the blockade measures still pose risks.
The IMF released its quarterly World Economic Outlook report in mid-April to predict that the global economy will shrink by 3% this year. The World Bank released its semi-annual Global Economic Outlook last week, which predicted that the global economy will shrink by 5.2% this year, the worst recession since the Second World War.