Weekly Analyst Update — June 22nd

Sofie Hendrick
Jun 22 · 3 min read

Central Banks Rush to Help Economies

  • The US market seems to be favouring a rapid rebound (“V-shaped recover”). This happened despite Fed Chair Powell’s pessimistic economic outlook.
  • Powell has long called on Congress to vote a government program in support of the economy. “It would be a real concern if Congress backed down too quickly on the support given,” Powell told the House Financial Services Committee.
  • Powell also said that the Fed will try to purchase specific bonds instead of ETFs, and gradually stop as the market stabilizes.
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  • PBOC Chairman Yi Gang stated that China will keep liquidity ample in the second half of the year. New loans are likely to hit 20 trillion yuan this year, up from 16.8 trillion yuan in 2019.
  • The Bank of England announced Thursday that it will increase its support for credit and the economy by raising its purchases to 745 billion GBP — a 100 billion GBP increase.

Coronavirus Making a Comeback?

  • The city of Beijing has stopped incoming flights and closed schools this week.
  • Australia announced that its borders would be closed until 2021.
  • After announcing that the country is “corona free,” new cases were reported in New Zealand, making its celebration premature.

Retail Sales on the Rise

  • Retail sales in the US jumped 17.7% in May, after falling 14.7% and 8.2% in April and March, respectively.
  • French retail sales are down 9% in May compare to 40% in April.

Oil Doubled Since Late April

  • The OPEC-led production cut of 9.7 billion barrels per day has been extended through July.
  • OPEC+ compliance with crude production cut commitments in May was 87%.
  • Oil prices are now trading at twice the price hit in late April.
  • However, the oversupplied market and slow reopening of economies around the world serve as resistance.
  • Oil prices could keep their current levels in the short-term.

Low Volatility for Bitcoin

  • The notoriously highly volatile market has actually been less volatile than the stock market over the past week.
  • On-chain metrics over the past week show miners increasing their inventory and transacting less. This may indicate an upwards move soon. Whether it will be enough to convincingly break the $10K level remains to be seen.
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The Week Ahead

  • Services and Manufacturing PMI data reports from Europe (Tuesday).
  • Reserve Bank of New Zealand rate decision (Wednesday).

Written by a team of experienced financial analysts at eToro.

This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results.

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