Easing of lockdown measures in progress, future still uncertain – Market Analysis – May 6

Easing of lockdown measures in progress, future still uncertain – Market Analysis – May 6

Market optimists might need to start paying attention to actual macro data soon

Investors remain more focused on news of the reopening of the global economy and less attentive to the bad economic figures that are being published, but everything indicates that they've taken it for granted.

US data

A horrifying ADP Non-farm employment figure (-20,236K) has had no immediate consequence on the development of market assets. In this scenario of market sentiment, the statistics do not seem to influence too much. Only over time, can it be verified if the weakness of the economy continues or recovery occurs; it will be possible to find out the direction of main investment flows.

Meanwhile, movements tend to be narrower, and volatility declines in most assets.

The stock markets, both European and North American, have had a reasonably smooth performance consolidating the latest increases and showing no signs of vulnerability.

USA500 remains in lateral movement above the support level at 2718, the loss of which would encourage the entry of sellers. The 2930 level at the top is the area to be overcome for the bullish moment to continue.


UK data


The UK Construction PMI April data, which has plummeted to 8.2 from 39.3 in the previous month, has managed to push the Pound Sterling lower. Everything indicates that the market is more aware of data in the case of the United Kingdom and that the figures for the evolution of the pandemic, quite worrying, are having a negative influence.

The Bank of England meeting tomorrow, very early in the morning, may give a clue to the future direction of the British currency. Any allusion to an increase in its monetary stimuli could be enough to pressure it down. No change in interest rates is expected.

GBP/USD has remained contained by the 2OO days SMA and points to a potential reversal pattern HS that would activate below 1.2300 and whose theoretical objective would be in the 1.1900 zone.



The energy markets

In the oil market, the inventory figures published today indicate that the situation of excess inventories is alleviating with only 4590M instead of the expected 7759M.

If these figures continue to decline, Crude Oil should stabilize as there is less pressure on futures contracts closer to maturity. If the reopening of the economies continues, global demand will rise.

BrentOil has had a technical correction of the last bullish leg, after the inventory figures are known but remains above the support of the 100 h SMA that currently goes through $27.79.


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