Markets Moving: Metals, Oil and Equities up with Tech down

21 juil. 2020

Markets have been moving today on the back of positive vaccine news amongst concrete stimulus hopes.

Silver rallied to a peak of $21.319 as investors and traders bet that a push to green energy will provide a silver lining to the metal. It is interesting to note that Silver has outperformed its counterpart Gold, with a 70% rise since its March lows. Analysts at Citibank expect Silver to hit $25 an ounce by the middle of 2021. Citi expects a clean energy push if Joe Biden, Democrats Presidential Nominee, gets elected. Biden has placed importance on clean energy in his $2 Trillion plan to push the US out of the Coronavirus's recession. Furthermore, the latest stimulus 750 Billion Euro stimulus plan from the EU has allocated a third of that recovery fund into fighting climate change. Silver is extensively used in the production of solar panels.

However, Silver's rise does not mean its Gold counterpart is doing too bad either. Gold reached a new time high, with the spot price rallying to 1,483.45 an ounce before pulling back slightly. Over $40 Billion has flowed into gold-backed ETFs in the first year, breaking last year's record. Downwards pressure on the US dollar due to quantitative easing and fiscal stimulus has forced investors to look towards these metals for yield.

Brent Crude Oil broke past $44 in the New York session as fiscal stimulus and backwardation finally broke past the resistance of $43.929. The black gold reached a peak of $44.998, before pulling back slightly. However, oil still has a little bit more to fill that gap to $45.228. This is in the midst of Chevron acquiring Noble energy in an all-stock deal for $13 Billion, a 7.5% premium from its current value. An industry filled with bankruptcies due to the Coronavirus, Chevron stands out with a strong balance sheet enabling it to take advantage of the crisis alongside keeping their dividend payout.

The Euro rallied against the US Dollar, peaking at 1.15289 as the European Union clinches on an agreement on stimulus funding. The recovery fund worth 750 Billion euros hopes to pull the bloc out of the recession. With a myriad of bond sales and taxes to finance the stimulus, the fund expects to give out 390 Billion Euros of Grants to harder-hit countries such as Greece and Italy, and over 360 Billion Euros in loans. "We are 27 around the table, and we managed together to produce a budget," Macron said at a press conference alongside Merkel. "In which other political sphere in the world is that possible, is that done? None."

Finally, in the Equity markets, we saw the SP500 and Dow Jones clinching a gain in the New York session, finishing higher than the NASDAQ. This is on the back on hopes that Congress can pass a second stimulus deal. However, agreement on the size of the stimulus cannot be agreed upon. Nancy Pelosi believes that 1T is "not close to enough" for the next stimulus. NASDAQ pulls back slightly of their all-time as investors await on tech earnings this week. However, they still lead in earnings relative to other equities.