2020-07-21 • Updated
The risk-on market sentiment pushed the stock index upward. What are the forecasts?
Three main reasons have increased the risk appetite today. Firstly, EU members have agreed on the 750-billion-euros recovery fund in the form of the joint debt. It will allow all the EU countries to recover faster from the downturn caused by the coronavirus. Secondly, the Oxford University in collaboration with AstraZeneca held successful human trials on the Covid-19 vaccine. Tests proved that the injection is safe and efficient. Riskier assets surged after the such promising news. Finally, the S&P 500 rose so much because tech mega-cap stocks surged such as Apple, Microsoft, Netflix and Facebook. For example, Amazon soared by 7.9% after analysts from the Goldman Sachs increased their target price on the stock up to $3 800. Indeed, Amazon has a real potential to further growth as its online retail and cloud-computing segments are in a high demand due to the coronavirus restrictions and the stay-at-home regime. Shares of Microsoft climbed up as well, because strategists raised their target prices for the stock ahead of the earnings report. The shift to the remote work increased the demand for its software and cloud services. Let’s look at the chart now.
The S&P 500 has reached levels unseen since February 24, 2020. It’s moving upward towards the next resistance at the high of January 17, 2020 at 3 325. If it breaks it through, it may surge higher to the all-time high at 3 390. This level remains the medium-term bullish target for most analysts. They believe that while the price is trading above the 3 000 level, bulls may be confident in the further index rally. Anyway, support levels are at the low of July 16 at 3 190 and at the low of July 7 at 3 135.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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