Lockdown Prompting Market Volatility

  • The outside world's worries have escalated, and the scope of the lockdown may be wider.
  • International oil prices continue to adjust, and are approaching a 5-month low.
  • The European Central Bank kept the three major interest rates unchanged, in line with market.

The US stock market rebounded slightly on Thursday, and technology stocks performed well. The third-quarter economic data of the US was better than expected to boost market sentiment. On the previous trading day, the three major stock indexes erased the gains since October.

As of the close, the Dow rose 139.16 points, or 0.52%, to 26,659.11. The Nasdaq rose 1.64% to 11,185.59 points, and the S&P 500 index rose 1.19% to 3,110.11 points.

Market Volatility This Week

US Dollars index

Hugh Gimber, a global market strategist at JP Morgan Chase, said that in the past, investors’ expectations were that the lockdown would be limited and targeted, so the impact on the economy would be small.

Now, the outside world’s worries have escalated, that is, the scope of the lockdown may be wider, and the impact on the economy will be greater.

In terms of individual stocks, Pinterest surged 28.2%. The company’s third-quarter revenue was $442 million, an increase of 62% per year. Global monthly active users were 442 million, an increase of 37% per year, far exceeding market expectations.

Ford revenue increased by 2.6%, boosted by strong pickup truck sales, the company’s third-quarter revenue and net profit exceeded expectations, and it is expected to be profitable in 2020.

Technology stocks strengthened, star stocks were favored by funds before the earnings report. Netflix announced a price hike in the United States, which raises the most popular package monthly fee to $14, and premium package price to $18. Earlier, Netflix had raised the price of services in Canada.

Other Markets

International oil prices continue to adjust, and are approaching a 5-month low. Investors are worried about the prospects for global economic recovery. The WTI crude oil contract fell 3.26% to $36.17 per barrel, and the Brent crude oil contract fell 3.76% to $37.65 per barrel.

The American Energy Information Agency (EIA) data show that US crude oil inventories rose by 4.32 million barrels last week, the largest increase since the week of July 24. It is believed that considering the severe demand situation, OPEC+ is becoming less and less likely to adjust the production reduction agreement as planned in January next year.

International gold prices hit a four-week low, and the US dollar is still the first choice for capital hedging. COMEX gold contract in December closed down 0.6%, reported $1,868 per ounce.

The report released by the World Gold Council (WGC) on Thursday showed that global central banks sold 12.1 tons of gold in the third quarter, the first net sale since 2010, and a net purchase of 141.9 tons in the same period last year. Global gold demand fell 19% this year to 892 tons, the lowest level since 2009.

Gold metals

European stock markets were mixed, and investors digested the impact of the lockdown measures introduced by Germany and France.

The pan-European Stoxx 600 index fell 0.12% to 341.76 points. The UK FTSE 100 index fell 0.02% to 5,581.75 points. The German DAX 30 index rose 0.32% to 11598.07 points, and the French CAC 40 index fell 0.03% to 4,569.67 points.

The tourism and leisure sectors were among the top gainers. The European Central Bank kept the three major interest rates unchanged, in line with market expectations.

The European Central Bank said that the risk is clearly skewed to the downside, and it is expected that the main interest rate will continue to remain at the current or lower level until the inflation outlook turns to a level sufficiently close to but below 2%. Quantitative easing will continue until the first rate hike.

European Central Bank President Christine Lagarde said that the Eurozone’s economic recovery is losing momentum and continues to be prepared to adjust all tools as appropriate to ensure that inflation is closer to the target in a sustained manner.

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Joyce Davis

My history goes back to 2002 and I  worked as a reporter, interviewer, news editor, copy editor, managing editor, newsletter founder, almanac profiler, and news radio broadcaster.

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