The massive measures of fiscal stimulation and support to both companies and the population that the leading countries of the world have announced today have been effective in giving hope to investors, and the world stock markets have experienced significant rebounds.
As we mentioned yesterday, this type of measure is what was really expected, and not only the monetary policy of the central banks, since the current crisis is not financial but of production and demand.
Obviously, the decisions approved by governments are no more than a shock treatment to alleviate the impact of closing activities in the short term, so the evolution of the stock markets will largely depend on the temporal extension of this situation.
But everything indicates that in the short term these are enough to stop the bleeding of the markets and we are likely to see improvements in the coming days.
As a reference, the S&P 500 index, at the time of writing this analysis recovers above 4% on the day. As we see in the chart, a daily close above the level around 2520 would be necessary to encourage further increases to the 2650 area.
On the other hand, Brent crude has once again suffered a setback that has led it to lose more than 3%. The reasons are that Saudi Arabia increases its exports to 10 Million barrels per day, and the demand has now decreased between 8 and 10 Million barrels per day; this results in excess production of 7 Million b/d for April and May. This can break the storage capacity of the system and push the price of crude oil to a minimum.
Technically we do not have solid references to establish a support, only a level of little consistency in the 27.80 zone which, if the current trend continues, would be exceeded without major problems and would direct Brent to the lows of 2003, 25.11 and from there up to areas as low as $20 a barrel.
The currency market has suffered less volatility than in the past few days. The US Dollar, as we pointed out yesterday, has strengthened, still with stress in overnight swaps that have reached peaks of tension.
EUR/USD has broken the main support of 1.1050 and has been trading at 1.0956 to undergo a technical correction later. Analysts say there’s a strong possibility we will see lower levels in the coming days with the next reference in the 1.0880 area.
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