Forex Today: Stock Market Powers Up on Coronavirus Vaccine Hope

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The rate of increase globally in new confirmed infections and deaths from the coronavirus pandemic seems to have peaked, at least for a first wave, although this may be at least partially due to the pandemic moving into South American countries which

  • Stock markets rose very strongly yesterday, with the S&P 500 Index making a new 2-month high and closing above its 61.8% Fibonacci peak-to-trough retracement. Many market analysts think the bottom of this bear market has already been reached, but other analysts see further strong falls likely in stocks over the coming weeks and months. There is a strong divergence of opinion, but yesterday saw the bullish case strengthen. Almost all risk assets strengthened. The move was driven partly by Moderna’s aggressive claims about its trials of a potential coronavirus vaccine.
  • Gold has fallen back sharply from the new 7-year high price at $1765. Higher prices this week look unlikely to happen.
  • The price of crude oil has begun to stabilize just above $30 per barrel.
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  • The rate of increase globally in new confirmed infections and deaths from the coronavirus pandemic seems to have peaked, at least for a first wave, although this may be at least partially due to the pandemic moving into South American countries which tend to have worse reporting systems. Total reported deaths globally peaked on April 18th and daily new confirmed cases on April 24th. However, it can be argued that the number of daily new cases globally is plateauing and not decreasing. Total confirmed new cases stand at more than 4.8 million with an average case fatality rate of 6.63%. The pandemic’s epicenter is still located in the U.S.A. outside New York state. The epicenter is close to moving to South America, with reported daily deaths there now almost as high as in the U.S.A. Both the total number of new cases and deaths continues to slowly fall daily in the U.S.A. and in the U.K. A world recession or possibly even depression from the pandemic appears to be inevitable, with Goldman Sachs forecasting a 34% drop in U.S. Q2 annualized GDP and other analysts seeing a 30% unemployment rate in the near future. If correct, these will be the worst such numbers seen since the 1930s, but it should be noted many analysts continue to see a much better outlook for U.S. unemployment. The WTO has forecasted that global trade is set to fall by one third. The U.S. now sees an unemployment rate of 15% and a drop in 1st Q GDP of 4.8%.
  • Forex markets came to life yesterday, dominated by weakness in the Japanese Yen and in the U.S. Dollar and strength in the Euro and the Australian Dollar.
  • The rate of new coronavirus infections appears to be increasing most quickly in Russia, Brazil, and India. Russia now has the second highest number of confirmed cases globally, followed by Brazil and the U.K. While a strong majority of confirmed coronavirus cases are still in Europe and the U.S.A., with the U.S.A. accounting for approximately one third of all cases, infections are beginning to increase dramatically in South America, which is now accounting for more than one quarter of global deaths. The situation is especially bad in Brazil which is currently confirming more than 14,000 new cases and 700 deaths daily. The President of Brazil Jair Bolsonaro, who compares coronavirus to the flu, has issued decrees trying to reopen the country which are being ignored by state governors.

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