European and UK stocks opened sharply lower on Thursday; the fall followed a pummelling session for US stocks on Wednesday. The Wall Street sell-off sparked panic in Asian markets, which then spread to Europe. Overall momentum is expected to be under pressure in the coming days as investors remain concerned about the rising inflation pressures, hawkish Fed and the COVID-19 cases are spiking in the U.S. As per the recent report the U.S. COVID cases increased 26 percent in the past week alone.
US stock futures extend the decline on Thursday. During the previous session, the Dow Jones Industrial Average sank more than 1,100 points and the S&P 500 had its biggest drop in nearly two years. The strong bearish sentiment is driven by disappointing earnings results from US retailers.
Shares of the retail giant Target (NYSE: TGT) plunged more than 25% on Wednesday, its most significant one-day drop since the 1987 market crash. Target profit tumbled 52% compared with last year's same period while the Q1 revenue was up 4% to $25.2B.
Crude oil prices ended lower on Wednesday as Hungary resisted a European Union push for a ban on Russian oil imports, a move that would tighten global supply. Meanwhile, the EIA data showed on Wednesday the US crude inventories declined by 3.4 million barrels last week.
In the currency market, the US Dollar Index, which measures the greenback’s value against the basket of six major currencies price action remains volatile as uncertainties remain high. the British pound struggling to find the upside momentum after the previous session's pullback.
The safe-haven metal bounced back to above $1820 on Thursday as risk aversion is on the rise. The metal continues to swing between losses and gains in the last couple of days. The key support level is located at $1780.
On the data front, Canada's annual inflation rate rose faster than expected in April. The Consumer Price Index rose 6.8 per cent in April from a year earlier, Statistics Canada said Wednesday, edging up from 6.7 per cent in March.
Moving ahead today, the important events to watch:
US – Jobless claims: GMT – 12.30
US – Philly Fed index: GMT – 12.30
Worldwide, more than 521 million people have been confirmed infected and more than 6.26 million have died. The United States has confirmed over 82 million cases and has had more than 999,000 deaths from COVID-19, the highest total in the world.
Technical Outlook and Review
EURUSD: The currency pair attempted to bounce but is currently struggling to extend the rebound. For today, the first resistance is located around 1.0540, a break above this level will confirm a possible move to 1.0560/80. On the downside, any meaningful pullback now seems to find some support near the 1.1410 zones.
The important levels to watch for today: Support- 1.0470 and 1.0430 Resistance- 1.0580 and 1.0610.
GOLD: On the daily time frame, the gold is currently supported at $1800, and the resistance is around $1830. On the upper side, the long-term buyers should wait for a daily close above the $1840.
The important levels to watch for today: Support- 1808 and 1800 Resistance- 1832 and 1840.
Quote of the day - “Make a mistake, analyze the mistake, understand the mistake, then get over it and focus on the next trade in the ongoing series of trades.” Peter Brandt.