Markets develop “immunity” to pandemic related news – Market Analysis

Markets develop “immunity” to pandemic related news – Market Analysis

The global focus is on the metal markets as volatility increases

Macro-economic news

The German economic figure from Ifo Business Climate, a survey of companies that rates business expectations in the next six months, has been published today with a better than expected result, 92.6 vs. 92.2, and has exceeded the previous figure of July (90.4).

This, together with the German finance minister's comments pointing to a better than expected development of the economy, has contributed to maintaining a positive mood of risk in the markets.

The signs of dissension between the United States and China in the trade war have also influenced the mood improvement.

As we pointed out in yesterday's analysis, this factor does not have a solid foundation since, at any moment, it can change as we have witnessed in recent years, especially if it becomes an electoral strategy ahead of the elections in November.

In this scenario, the stock markets experience gains of around 0.5%. The US Dollar has weakened slightly against all major currencies, with the sole exception of the Japanese Yen, which decreases more than the Dollar in an environment of higher risk appetite.

In short, a very calm market characteristic of the current holiday dates in which the number of participants and liquidity decreases substantially, but is also exposed to abrupt movements if a disruptive event occurs in the market.

In any case, the market maintains an optimistic bias that needs to be confirmed with real recovery figures for the economy and the pandemic evolution, which has not yet happened.

The metals market

This positive trend is noticeable in metals.

COPPER, the primary industrial metal that is a barometer of manufacturing activity, has recovered all losses caused by the start of the crisis and is close to exceeding the highs reached at the beginning of 2019 at 3/lb.


This behavior shows that the demand for this metal has increased in recent months, mainly due to purchases from China, a country whose production level has already reached levels close to pre-crisis levels. Technically, it is an uptrend that needs to overcome the resistance of $3 per lb to move towards its next medium-term target in the area of $3.29 per lb.

Other metals such as GOLD and SILVER have also experienced a substantial bullish momentum for reasons other than those related to the increase in industrial activity.

GOLD reached all-time highs in the $2,075 area and is currently making a technical correction after the spectacular rally experienced. But the conditions for this rally to continue are maintained, and the market expectations are that the maximums reached will be exceeded.

It keeps its upward path with objectives that some analysts place above $2,500 in the medium term.

A valid investment alternative to GOLD is SILVER, which usually directly correlates with GOLD, but this time it has lagged and started its rally late. This metal has not reached its all-time high of $49.83 per ounce and is still a long way.

Market sentiment is bullish for SILVER, which from a technical point of view on medium-term charts, has no resistance up to the zone around $35 per ounce.


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