Market Summary (January 11 – 15)
Uncertainties kept investors cautious
Last Friday, the Wall Street closed lower as traders reviewed the worries over the markets. Despite the announcement of the $1.9 trillion stimulus plan from Joe Biden’s administration, the deteriorating coronavirus pandemic continues to weigh on the market sentiment.
Investors expected that the new US government may consider to raise tax to solve part of the budget deficit due to such massive fiscal support, that on the other hand may weaken the recovery of the US economy and the effectiveness of the current monetary policies.
ZFX analyst Jacob Leung said that it would be a “trade-off”. If Biden’s tax policy is implemented, the dollar’s outlook will be a bit different. And in turn, the whole market sentiment may not be that bullish.
Market Forecast this week (January 18 – 22)
Dollar index may reach 91 level
However, stocks today in Asian markets were mixed as investors were a bit positive to react to the better-than-expected Chinese GDP data of Q4. Reuters reported that the Trump administration has revoked the licenses of providing supplies to the Chinese telecommunications giant Huawei. But, on Monday, stock markets of HK and Mainland still traded higher amid the potential escalating China-US uncertainty. Markets in the US are closed for a holiday.
ZFX analyst Jacob Leung said that the trend of dollar may change, especially if the euro tends to be downward. Not only the worsening of the global coronavirus cases boosted the safe haven demand, but also the lockdowns in Europe and the Italian political chaos put pressure on the euro.
WTI “little double top”
The oil prices were relatively stable recently as investors are bullish to bet on the trillion dollars relief bill in the US and the OPEC+ policy.
But, last Friday the oil markets were experienced a correction under the cautious sentiment. Traders start to question the global demand again under such severe pandemic situation and the sustainability of the production cuts from the OPEC+.
ZFX analyst Jacob Leung said that the tech movements of the oil prices were not that optimistic, that may cause further retracement. Of course, the tax worries of the US also hurt the outlook of the oil market.