Lingering uncertainties regarding the global economic outlook cap risk demand
US stock markets finished mostly higher overnight, with the S&P 500 and Nasdaq Composite rising to fresh all-time highs despite mixed economic data. The U.S. Census reported a 36% surge in sales of newly built homes in July, the Conference Board’s consumer confidence index fell to a six-year low. On the positive side, the number of newly confirmed coronavirus infections in the U.S. has dropped.
On the trade front, China’s Ministry of Commerce said the two countries discussed strengthening the coordination of their economic policies during the recent negotiations. Now, market players are shifting focus to the Fed’s chair Jerome Powell’s speech later this week. Ahead of this event, investors are getting more cautious in their trading decisions.
Asian stocks traded lower on Wednesday amid lingering uncertainties regarding the global economic outlook. MSCI’s index of shares outside Japan that notched a two-year high a day earlier, slipped 0.1% today. The Hang Seng index shed 0.07%, while the Shanghai Composite lost nearly 1.5% during the session, suggesting that investors remain cautious about a second wave of the coronavirus pandemic.
In Europe, equities started the session with a mild bearish bias but turned mixed a bit later as hopes of additional stimulus in the region outweighed concerns over rising virus cases across the continent. Of note, French prime minister, Jean Castex, confirmed that France would unveil its €100-billion economic recovery plan on 3 September.
Meanwhile, dollar demand picked up slightly early on Wednesday amid the prevailing risk-off tone in the global financial markets. However, the general picture continues to point to the persisting weakness in the greenback. EURUSD continues to oscillate around 1.18, struggling for direction after a correction from two-year highs above 1.1950.
Elsewhere, gold prices remain under a mild pressure on Wednesday, with the bullion still holding above the $1,900 significant support. Should risk aversion turn more aggressive any time soon, the precious metal may regain the bullish bias but it looks like the prices could see a deeper retreat before another bullish attack takes place.